The Formatted Address field does not respect the privacy setting on the individual address fields. The entire address will show in the Formatted Address merge field on a Profile Display part no matter what privacy fields are chosen for the individual address fields.
The privacy settings are designed to work only with the line item address data fields [e.g. Address Line 1, Address Line 2, City, State, ZIP]. These settings do not apply to the "Formatted Address" field.
To ensure that any privacy settings are properly honored within a Profile Display part, display only the line item address data fields - do not use the "Formatted Address" field.