In an effort to improve the state of consumer privacy, Federal Reserve Board, the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision, on January last year announced that they have put together joint guidelines to safeguard confidential customer information. The guidelines, that took effect last July, implement section 501(b) of the Gramm-Leach-Bliley Act (GLBA) initiated by the Senate Banking Committee, and passed into law on November 4, 1999. This announcement had significant implications for online banking institutions.
and the banking industry. Online banks develop many strategic relationships with online merchants. In doing so, sensitive customer information currently can be transmitted across insecure networks in plaintext, without significant recourse or penalties. It will be up to the online banks to make sure their merchant partners are complying with these new regulations. While this undoubtedly increases the workload for online financial institutions, it will also give them leverage to force their merchant