Bank Records and Financial Privacy Laws

Your bank records say more about you than your account balance. For instance, certain transactions may indicate fraud or hidden assets. Bank records can be a valuable tool for criminal prosecutors conducting official investigations. But everyone has the right to a certain level of privacy from the government's prying eyes.

Before 1978, bank customers had no legal right to privacy with regard to personal financial information. But the Right to Financial Privacy Act of 1978 (RFPA) added some protections at the federal level. Some states also have financial privacy laws. These laws regulate how and when the government may access bank records without customer consent.

Below, we'll discuss the RFPA and how it works to protect some level of confidentiality when it comes to your bank records.

Financial Privacy Laws: Background

In 1976, the U.S. Supreme Court held that there was no reasonable expectation of privacy in bank records. The Court ruled that such records are the property of the financial institution, not the customer. This also meant that banks were not required to disclose when they provided a consumer's records to the government or law enforcement. In other words, the government could access your bank records without your knowledge or consent.

This ruling prompted Congress to pass the RFPA two years later. This federal law requires government officials to follow specific procedures when requesting bank records. It also imposes limits on banks and lenders before they can release such information. Lastly, it requires written notice to be given to bank customers about the government's request.

The Right to Financial Privacy Act

Under the RFPA, the federal government agency must first send the customer written notice of its intent to obtain the customer's records. The federal agency must also provide an explanation of why it's seeking the customer's information.

The RFPA applies to the following customers of financial institutions:

• Any person who uses any financial service or financial product of a financial institution (such as a bank or credit union)
• Any person for whom the financial institution acts as a fiduciary
• Corporations or partnerships of five or fewer individuals

Before a government official may access a customer's bank records, they must first obtain one of the following:

• A grand jury subpoena
• An administrative subpoena or summons
• A search warrant
• A judicial subpoena
• A written request by a government agency (in the absence of summons or subpoena authority)
• A signed and dated authorization by the customer

The financial institution may not release the requested bank records until the government authority certifies in writing that it has complied with the above procedures. As the customer, you also have the right to inspect the requested documents under the RFPA.

RFPA Exceptions and Other Provisions

The RFPA allows financial service providers and institutions to contact law enforcement about any information they may have indicating a violation of the law. The law also has some specific exceptions to privacy notice and certification requirements. These exceptions apply to financial records:

• Provided to the court to prove a claim in bankruptcy
• Requested under Internal Revenue Service (IRS) procedures
• Subject to a subpoena in connection with a grand jury proceeding
• Related to a financial institution being investigated
• Related to the government's authorized foreign intelligence activities

What if Your Rights Are Violated Under the RFPA?

If a financial institution or the government fails to follow the RFPA, you have the right to sue for both injunctive relief and damages. The legal damages you can seek for RFPA violations include:

• Actual damages
• A set damage rate of $100 per violation (regardless of the volume of records involved)
• Court costs and reasonable attorney's fees
• Any punitive damages the court allows for intentional violations

If your rights were violated under the RFPA, you have three years from the date of the violation (or the date it was discovered) to file a claim.

Other Relevant Federal Regulations

In addition to the RFPA, several other federal regulations play a role in safeguarding consumer information and financial privacy. State law also adds an additional layer of protection.

• The Fair Credit Reporting Act (FCRA) governs the collection of consumer credit information by credit reporting agencies.
• The Federal Trade Commission (FTC) enforces consumer protection laws. This includes privacy protections related to financial information.
• The Gramm-Leach-Bliley Act (GLBA) mandates financial institutions to establish privacy protections for non-public personal information. It also reinforces the importance of disclosing privacy notices to consumers.
• The Consumer Credit Protection Act, found in Title 15 of the U.S.C., addresses various aspects of consumer credit and imposes obligations on creditors.
• The Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Securities and Exchange Commission (SEC) are federal agencies that ensure the privacy of consumer financial information, setting standards for reporting agencies and financial institutions.

These laws and agencies safeguard consumer data and uphold privacy in the financial sector.

Have You Suffered a Breach of Financial Privacy Laws? An Attorney Can Help

Your privacy is important. Breaches of your financial privacy can significantly impact you and your loved ones. If you believe a financial institution or government agency has violated the Right to Financial Privacy Act, you may be able to get some relief through the legal system. Learn more about your next steps by contacting a qualified consumer protection attorney near you.