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Many US banks issue a privacy statement to their customers (for this question, assume a credit card customer) containing language like what's below, followed by a yes/no "Do we share?" and yes/no "Can you limit this sharing?" in a table. Examples include the Bank of America Consumer Privacy Notice or Chase Privacy Notice.

One of these areas is:

For our affiliates' everyday business purposes – information about your creditworthiness

which is often followed by "Yes [we share]" and "Yes [you can limit this sharing]." Instructions for how to limit the sharing are provided below the table, usually by calling some number or going to a Web page to set preferences.

Does setting this privacy-protecting preference limit the bank from sharing information about your creditworthiness with their affiliates which are credit bureaus?

If not, why not? Why must the bank tell customers they can restrict the bank's sharing of their creditworthiness data, but then send the data to the credit bureaus anyway?

It seems to me that maintaining credit records/files on individuals is the primary everyday business of the credit bureaus, and that the credit bureaus are affiliated with the banks through formal business contracts. Are either of those perceptions wrong?

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See the first item in the list:

For our everyday business purposes – such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus

Note that there's no option for you to limit this sharing.

Credit reporting is the business need of the bank, not of the bureaus. They rely on them and others reporting it in their main business: lending.

While you can limit the sharing with other banks/insurance companies/service providers so that you won't get offers from them based on the data shared by the bank, you cannot limit the credit reports themselves.

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  • Nice answer with the quote. The justification ("Credit reporting is the business need of the bank") seems a little sketchy, though. Selling your data provides revenue, which is also a business need of the bank. Similarly, credit reporting is the (core!) business of the credit bureaus. – WBT Apr 18 '16 at 15:39
  • @WBT selling data provides revenue, but it is not the main business of the bank. The ability for you to not allow them selling your data is a legal requirement. They do not have a legal requirement to cripple themselves by not providing your data to credit reporting agencies, but you can always walk away and use a different bank. – littleadv Apr 18 '16 at 17:02
  • Obtaining revenue (esp. which exceeds relevant marginal costs) is the main business of the bank and many other for-profit businesses. Even if you argue it's not the primary/"main" business of the bank, the criteria you laid out is whether or not it's a "business need," and most businesses would fail without revenue. The bank not transmitting data about my creditworthiness (to credit bureaus or anyone else) would not cripple the bank. The bank is more directly financially affected by whether or not a borrower repays than by what they report about whether or not the borrower repays. – WBT Apr 18 '16 at 20:01
  • @WBT you're welcome to present your case to the FTC and the State regulators, I see no point in this discussion here. – littleadv Apr 19 '16 at 3:00
  • This discussion helps point out - to other readers of this top answer - that the decision rule expressed here (that something is allowed, without consumer choice, and not fully consistent with the language provided to customers about their choices just because it supports "a business need of the bank") may not be the test regulators etc. are applying. – WBT Apr 19 '16 at 14:13

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