Privacy.com Changes Their Terms

Recently, Privacy.com reached out to their customers regarding a change in their terms of use. Further, all customers are required to agree to the changes in order to continue using their accounts.

You can view the new cardholder agreement here.

When you log in, you'll be greeted with a pop-up window asking you to review and agree to the new terms of use. You will also not be able to open any new cards until the terms are agreed to.

Changing from a "Prepaid Debit" Model to a "Charge Card" Model

The actual content of the changes is interesting. While the historical model of using Privacy.com was akin to prepaid debit cards, the new model is very similar to a credit card (they use the term "charge card").

I have used Privacy.com for 1-2 years, and the process was always that you would create a single-use or merchant-locked card. This card could be used for any dollar limit you set and would immediately draw the funds from whatever funding source you connected, e.g. PayPal account or a bank account.

The benefit this service provides with a premium account is masking the merchant names from your funding source. If you have a concern that your bank account uses merchant data from your account, you could direct all charges through Privacy.com and set the merchant as one of their pre-set options, such as "Smiley's Corner Store" or "NSA Gift Shop."

The new model still works with a bank account as a funding source, but the model is changed so that you get a "line of credit" set according to a 14-day billing cycle. It seems that Privacy.com will now allow charges to be incurred without being immediately paid.

Daily Payments and Available Credit

Instead of paying as charges are incurred, you must make a "Daily Payment" and your "Available Credit" will be locked until you make that payment. There are also "End of Billing Cycle Payments" that are assigned a due date.

Further, Privacy.com will decline charges that would cause you to exceed your Available Credit or Credit Limit.

One particular interesting section states the following:

YOUR OBLIGATION TO PAY US BACK FOR ALL CARD TRANSACTIONS AND OTHER OBLIGATIONS YOU INCUR IS SECURED BY THE SECURED ACCOUNT. IF YOU DO NOT PAY US BACK FOR ANY AMOUNT YOU OWE US WHEN YOUR PAYMENTS ARE DUE, WE WILL EXERCISE OUR INTEREST AND DEBIT THE SECURED ACCOUNT, AND YOU WILL LOSE THE MONEY IN THE SECURED ACCOUNT. SEE SECTION 8: SECURITY AGREEMENT FOR MORE INFORMATION.

Personal Information

Now that Privacy.com is more of a financial institution, they are obligated to comply with the know your customer guidelines/laws.

I did not proceed with the change to my Privacy.com account, but I have heard from some peers that the changes require more personal information to be submitted, such as SSN. I am not aware of all new personal information required or if the funding source is now required to only be a bank account.

Fees

Luckily, the fees section did not change much. The subscription fees for a premium account are still the only fees.

My Thoughts

Personally, I wiped my personal information from my account and then permanently deleted it when I heard about these changes. I have no interest in yet another method of credit lending offered by private companies. While I accepted that they would have access to my bank account information for the purposes of paying off my prepaid debit payments, I have no interest in incurring charges that will need to be paid back at a later date. I also have no interest in submitting personal information to Privacy.com.

This type of change toward a "buy it now, pay us later" model is concerning, and I will be watching Privacy.com to see if they further their interests in the credit model as time goes on.

Could we see them start charging interest, fees, etc.? I'm not sure, but this change does not inspire confidence in their mission as a privacy-focused company.