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From time to time, financial institutions receive law enforcement inquiries about their customers from government authorities. The question then arises as to whether consumer finance companies can or must comply with such inquires. The answer turns on the very specific definitions of the terms italicized above. Let’s take a dive into the law.

The Right To Financial Privacy Act (RFPA) is a federal law that protects against the disclosure of a customer’s financial information by a financial institution to certain governmental authorities. Like all statutes, it is highly dependent on definitions. So, here are some of the critical definitions:

• Financial institution means [with certain exceptions] any office of a bank, savings bank, card issuer, industrial loan company, trust company, savings association, building and loan, or homestead association (including cooperative banks), credit union, or consumer finance institution, located in any State or territory of the United States.
• Government authority means any agency or department of the United States or any officer, employee, or agent thereof.
• Law enforcement inquiry means a lawful investigation or official proceeding inquiring into a violation of, or failure to comply with, any criminal or civil statute or any regulation, rule, or order issued pursuant thereto.

With these definitions in mind, now consider the following:

• An installment lender most likely falls under the definition of a financial institution under the RFPA. Even though most of the defined businesses described in the definition take deposits as well as make loans, a card issuer is specifically named as a financial institution and such entities certainly are not depositories. So, when the RFPA sets forth that it applies to consumer finance institutions, I believe that it means traditional installment lenders as well.
• The RFPA does not apply to law enforcement inquiries for information by state and local government authorities. While the Act does not contain explicit provisions regarding its effect on state law, the legislative history of the RFPA indicates that Congress intended to regulate access to customer records by federal agencies and departments only, without precluding states from regulating access of state and local agencies to such records.
• Some states have virtually the same protections as the RFPA. Alabama is not one, as far as I can tell.
• In fact, in Alabama, a bank is protected in disclosing financial records of its customers pursuant to a lawful subpoena, summons, warrant or court order issued by or at the request of any state agency, political subdivision, instrumentality, or officer or employee thereof and served upon the bank. Further, no bank, director, officer, employee or agent thereof shall be held civilly or criminally responsible for disclosure of financial records pursuant to a subpoena, summons, warrant or court order which on its face appears to have been issued upon lawful authority.
• Finance companies are not the beneficiary of a similar Alabama statute.

If you receive an administrative subpoena, summons, search warrant, judicial subpoena or a formal written request (“Subpoena”) from a state court judge ordering you to produce a customer’s financial information to a state law enforcement authority, I think that you may and should comply.

If you receive a Subpoena from a state court judge ordering you to produce a customer’s financial information to a federal law enforcement agency, I do not think you can comply absent such agency’s compliance with the RFPA.

Practice Pointer: If you receive a law enforcement inquiry from any governmental authority, it may be a good idea to bring in the lawyers to help you analyze how to respond.