What is an example of a nonaffiliated third party?

A nonaffiliated third party refers to an entity or individual that is independent of a financial institution and does not have a direct relationship or control over the institution. In the context of privacy compliance, understanding the distinction between affiliated and nonaffiliated entities is crucial, especially when it comes to data sharing and consumer consent requirements.

The correct answer describes a company that does not share control with the financial institution. This means that the company operates independently, without any governance or ownership linkage to the financial institution. As a result, it is not subject to the same regulatory obligations concerning the handling and sharing of personal data of consumers that apply to affiliated entities.

This distinction is significant in the context of privacy compliance, as nonaffiliated third parties may have different requirements under laws such as the Gramm-Leach-Bliley Act, which mandates certain privacy notices and opt-out options related to sharing consumer information with nonaffiliated third parties. Understanding this concept helps ensure that consumer data is managed in compliance with applicable privacy laws.