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financial privacy strategies

How To Protect Your Privacy Using Simple Financial Privacy Strategies

by Trace Mayer, J.D. on April 17, 2012

Reading time: 4 – 6 minutes

If you want to protect your privacy then you must use effective financial privacy strategies. Financial institutions are supposed to keep their customers’ information private. It’s against the law for them to give out a customer’s personal information without his or her permission. In 1999, the Gramm-Leach Bliley Act (GLBA) was established to provide limited privacy protections against the distribution and sale of your financial information. Despite this Act some banks and credit card companies still can’t be trusted and you have to come up with your own financial privacy strategies.

Take Charge Of Your Financial Privacy Strategies

So, if you can’t even trust banks, who can you trust? The safest thing to do is to take the protection of your financial privacy into your own hands. For instance, if you want to purchase real estate then do so through an LLC. The good thing about being involved with an LLC is that creditors can’t pursue your personal assets to pay off business debts unless they are able to pierce the corporate veil. This can be very helpful if you ever owe money on business credit cards.

Another way to protect your financial privacy is to pay cash whenever you can. If the thought of banks or creditors tracing your every purchase makes you uncomfortable then just switch to cash. Sure, it’s easier to carry around debit or credit cards and swipe them in card machines but paying with cash will provide you with more privacy.

Financial Privacy Through Using BitCoin

And then there is Bitcoin. Bitcoin is a decentralized electronic payment system using peer-to-peer networking and cryptographic protocols. Bitcoins are purely digital units of currency. They can be transferred between two parties for the purchasing and selling of products. The system began in 2009 when creator Satoshi Nakamoto released the original client as open source software.

Why is this digital payment system good for privacy? Well, unlike Paypal, you don’t have to provide a whole lot of private information. While the transactions do show payment amounts and addresses in the public blockchain the identities behind those transactions are not exposed.

Currency exchanges also exist between Bitcoin participants. They can exchange real currencies such as the US dollar and virtual currencies such as the Linden Dollar. The price of 1 BTC goes up and down all the time and is now approximately five US dollars. To get more information, you can read How To Obtain Financial Privacy Through Using BitCoin.

Financial Privacy Strategy – Don’t Forget To Opt Out

Don’t just assume that banks or other financial institutions will protect your privacy. Some of them will actually make your formally “opt out”. They will not give consumers privacy protection unless customers specifically state “no” and opt out. Carefully read over a bank’s privacy policy before you sign anything. Look for the option for opting out.

Credit Report Protection

Only organizations to whom you give permission can look at your credit report. A few examples include your lender, potential employer (after you fill out an application), landlord or landlady and credit card companies.

Under the Fair Credit Reporting Act the only people who can get a copy of your credit report are those with a legitimate business need. Your employer or potential employer can only get a copy if you provide written consent.

Take a look at your credit report every month to see who has been viewing it. The three major credit bureaus include Experian, Equifax, and Transunion. If you don’t recognize an organization who requested a copy of any of the reports then contact the bureau to find out who it was. You can also contact the credit bureaus to clean up your report of any errors or omissions.

Conclusion

As long as you keep these tips in mind you should be able to protect your financial privacy using these simple financial privacy strategies. Use financial entitites like LLCs, cash when possible, switch to alternative value transfer systems like BitCoin, opt-out of information sharing agreements from banks and watch your credit report like a hawk.

Hopefully, you now have an idea of different financial privacy strategies and how they can help you to take control of and protect your financial privacy. And remember: ALWAYS go that extra mile to protect your personal information by implementing stealth tactics from sources like the Bank Privacy ReportThe Mini-Guide To Financial Privacy or A Lawyer’s Take On BitCoin And Taxes.

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ABOUT THE AUTHOR: Trace Mayer, J.D., holds a degree in Accounting, a law degree from California Western School of Law and studies the Austrian school of economics. He works as an entrepreneur, investor, journalist, monetary scientist and operates Run To Gold. He is a strong advocate of the freedom of speech, a member of the Society of Professional Journalists and the San Diego County Bar Association. He has appeared on ABC, NBC, BNN, many radio shows and presented at many investment conferences throughout the world. This is merely one article of 41 by .
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{ 2 comments… read them below or add one }

1 Joan June 17, 2012 at 11:48 am

One problem with your post, that while technically accurate – in reality it doesn’t work this way. You said:
“Under the Fair Credit Reporting Act the only people who can get a copy of your credit report are those with a legitimate business need. Your employer or potential employer can only get a copy if you provide written consent.”

The problems:
1) The reality is the company only has to “state” that they have a valid business reason and get your credit information, and yes that includes the full information from all 3 bureaus. There are a lot of companies that provide information for small businesses (I use one) and they only ask that I keep a copy of the signed (unnotarized) release “in case” there is an audit, they never ask to see it before giving me the full credit information. While I am reputable, many other companies are not and there is no check and balances to protect the individual.

I have found on my credit report inquiries run by companies that I never dealt. I called the credit bureau, they say call the company. I call the company that ran the report, they say it was one of their customers and call that customer (same set up I use). I call that customer and they said “well you had a mortgage at some point, didn’t you, we work with mortgage companies”. Most people have had a mortgage at some point in their life. This customer that got my credit info could not say what mortgage I had nor prove they had any legal right to obtain the credit information (if they could not even say the mortgage company I used, how legit were they?). I had not had a mortgage for several years. So the company states they have that business reason they get the credit information, even if they really do not have a legitimate reason, and they have your information and there is no way to get the information back from them or stop them from sharing it with others. The only recourse everyone gives is to do a lawsuit (costs lots of money), but many are based in another country (even Canada) so they can continue to break US law and never be held accountable.

I agree opting out can stop a lot of problems. A co-worker had some call to discuss refinancing their mortgage. The person calling them had all sorts of personal credit information including details about their current mortgage, their house value, etc. When the co-worker asked how this company knew this information, they said the husband had already called to talk to them [this husband never did anything financial so she knew it as true but a later phone call confirmed this]. I know of companies that say they are offering some product, get all sorts of financial information from the bureaus and then sell this information to other companies that are using it for other purposes. Yes, illegal, but it happens a lot. Opting out from each of the 3 credit bureaus can prevent some of this.

2 Trace Mayer, J.D. June 23, 2012 at 10:24 pm

Joan, there are tons of shady operators like that. Remember the proverb: The borrower is servant to the lender. I try to minimize my use of debt as much as possible and if I do incur debt it is usually with a longstanding relationship. Living an equity, as opposed to debt based, life can grant a lot of additional privacy. I like to keep my debt-to-equity ratio around 10% if not lower.

For example, holding real estate in a New Mexico LLC without a mortgage attached to it. If you have a good banking relationship then you can get a line of credit, etc. in many cases and sometimes unsecured or you can secure it with one piece of real estate and keep your other pieces or assets unencumbered.

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