March 31, 2000

Jonathan G. Katz
Securities and Exchange Commission
450 5th Street, NW
Washington, DC 20549
File No. S7-6-00

Dear Sir:

USAA appreciates the opportunity to submit comments on the proposed privacy rules issued pursuant to section 504 of the Gramm-Leach-Bliley Act of 1999.

Introduction to USAA

The United Services Automobile Association (USAA) has been serving present and former members of the U.S. military and their families for more than 77 years and has become one of America's leading insurance and financial services companies. The association, well known for its exceptional customer service, offers its 4.5 million customers a variety of insurance, banking and investment products and services designed to help them meet their financial security needs.

The wide range of products and services offered by the USAA family of companies includes: property and casualty, life and health insurance; annuities; no-load mutual funds; discount brokerage; trust services; deposit and savings accounts; mortgages and relocation services; vehicle purchase assistance; and credit cards. The USAA Alliance Services Company offers additional quality products and services via strategic partnerships with outside vendors, including: catalog merchandise, long distance, Internet service, home security, floral service, rental car programs, and cruise travel. With the exception of its property and casualty insurance products and alliance services, which are available only to USAA members, products are available to the general public.

USAA has a relatively unique relationship with its customers. The association is owned by its customers and thus does not have the shareholder-driven obligations that some companies have to return dividends and profits. USAA's customers are commonly known within the organization - and self-referentially - as "members" of the USAA family. USAA's mission in serving its membership has been to provide "one-stop" financial services that address the unique needs of the military community and to back them with impeccable service that is tailored to the requirements of the men and women in uniform and their families. USAA members demand - and the Association is always striving to provide - a complement of financial products, which are always offered under the USAA brand.

USAA's foremost goal in implementing new privacy requirements is to ensure that USAA is able to maintain the legacy of trust and reputation for great service that it has developed with its customers for over three quarters of a century.

General USAA Comments

USAA has comments on specific provisions in the regulations, but would first like to make some general observations. We strongly believe in the protection of customer privacy. Assuring our members that we protect their privacy is essential to maintaining a relationship of trust.

We have learned that to effectively communicate the message, communications must be short and simple. A lengthy and complex disclosure overshadows the message. USAA is very concerned that the Commission's proposed disclosure requirements - if not modified - will severely hinder our customer service efforts. The disclosures proposed by the Commission are too lengthy, too confusing, and appear to limit the ability of affiliated companies to provide a single point of service for administering customers' opt-out inquiries and elections.

In serving our unique customer base, which includes a large and growing percentage of active duty U.S. military personnel around the world, we have found that our members demand streamlined services. USAA conducts very few face-to-face transactions and strives to provide outstanding response time and quality using an array of the most up-to-date technology and communications services. We have deep concerns about the impact of the current draft proposal on USAA's ability to continue this extraordinary level of customer service. It is our hope that the Commission will strive to ensure that integrated financial service providers like USAA can provide a common privacy disclosure notice to its customers that is simple and understandable and then offer a single point of contact to exercise the opt-out rights granted under the Gramm-Leach-Bliley Act.

Association Comments

USAA is a member of a number of national associations that represent the lines of business and products that we offer. We would therefore like to endorse those comments that will be submitted by the following associations, since they address in more detail the specific needs of USAA's parent and subsidiary companies:

Detailed USAA Comments

Section 248.3 Definitions

Section 248.4 Initial notice to consumers of privacy policies and practices required

Section 248.6 Information to be included in initial and annual notices of privacy policies and practices

Section 248.7 Limitation on disclosure of nonpublic personal information about consumers to nonaffiliated third parties

Section 248.8 Form and method of providing opt out notice to consumers

Section 248.13 Limits on sharing of account number information for marketing purposes

Section 248.16 Effective date

Inadvertent Errors

Finally, USAA requests that the Commission consider the creation of a safe harbor defense against inadvertent failures. We are concerned that such failures may occur despite the institution of appropriate policies and procedures and good faith efforts to comply with the regulations.

Again, USAA appreciates the opportunity to comment on this proposed regulation and respectfully requests your consideration of our views.


Bradford W. Rich
SVP, General Counsel