Which of these practices must financial institutions avoid when handling customer information?

The practice financial institutions must avoid when handling customer information involves requiring customers to opt-out collectively. This approach is in contrast to the more customer-centric practices promoted by regulations like the Gramm-Leach-Bliley Act (GLBA) in the United States, which emphasizes that customers be given an opportunity to make informed choices about how their personal information is used.

Requiring collective opt-out options can create confusion and inconsistency in customer consent, potentially leading to unethical practices where individual preferences are overlooked. Instead, financial institutions should allow customers to exercise their rights on an individual basis, ensuring that they can make personalized decisions regarding their data. This not only complies with privacy regulations but also builds trust with customers, as they feel more empowered and in control of their personal information.

In contrast, implementing security measures, regularly training employees on data privacy, and conducting audits for compliance are all standard practices that enhance data protection and demonstrate a commitment to safeguarding customer information. These practices are crucial to maintaining the integrity of financial institutions and complying with legal requirements related to customer data privacy.