Personal Loan Privacy Concerns: The Forgotten Factor

[Aug 27, 2009.]

 

When seeking out an unsecured personal loan, privacy protection is not usually the top of mind consideration for most borrowers. Getting approved for the loan is the main idea.

But privacy is important and should be considered as part of every personal loan transaction.

Personal Loan Information Is Personal

Privacy should be a concern for personal loan transactions because filling out an application for an unsecured personal loan can mean giving out some very personal information. Place of employment, bank account number, social security number, and so on.

Many online personal loan companies treat that personal information with respect and according to FDIC guidelines on how such personal information can be used and by whom.

The FDIC requires that any financial institution making a loan send consumers certain materials that inform them of the privacy practices of the financial institution they're borrowing from. Including:

-- Initial Privacy Notice

-- Annual Privacy Notices

-- Notice of Change in Privacy Notices

It's an exceedingly good idea to read these materials. Borrowers who do not understand those notices should call their finance company, or may seek additional help from the Federal Trade Commission by calling 877-FTC-HELP.

Online Personal Loan Companies and Privacy

Online personal loan companies are sometimes not actually financial institutions, but affiliates of financial institutions that locate consumers who need financial services and then connect them with personal loan options.

Because such operations are not lenders, they may not be regulated by the policies of governing bodies such as the FDIC and the FTC.

Nevertheless, borrowers should still be presented with a clear and comprehensible statement about how their personal information is going to be shared and with whom. Here find an example of a good privacy statement from a non-lending online personal loan purveyor.

The Double-Edged Sword of Too Much Privacy

Some consumers, and some consumer advocacy groups, get all hopped up on the idea of privacy violations and forget that without some sharing of consumer information, it is not possible for lenders to make unsecured personal loans.

No financial institution is going to lend a consumer money without knowing the basic facts of who that consumer is and what kind of credit risk they are. In that sense, giving up some privacy is part of the process of applying for a personal loan.

Still, there is a line that should not be crossed.

 

 

About Author:

Andrew Freiburghouse is a writer and businessman. He has worked as a magazine reporter, tax preparer, screenwriter, copywriter, and loan officer. He graduated from Santa Clara University in 1999 with a B.A. in English. Andrew was born and raised in the City of Los Angeles.