Elections are looming around the corner for President Biden, which means it’s time to show results. In an effort to make an impact, the Consumer Financial Protection Bureau (“CFPB”) is making strides in the consumer credit industry, focusing on oversight over its players in order to protect consumer data. In the first week of April, CFPB Director Rohit Chopra delivered remarks at the White House on increasing credit and financial data protection and regulation. This came just a few days after the CFPB jointly filed an amicus brief with the FTC to hold credit report agencies more accountable in their handling of data. The CFPB is making a statement, and the consumer credit industry should listen. If we could say 2023 was a big year for oversight over junk fees1, it seems 2024 is the year of consumer credit, specifically consumer credit data.
Director Chopra’s remarks spoke on data protection and national security, with an emphasis on greater regulatory oversight of “data brokers” by the CFPB. Several weeks before these remarks, President Biden had signed an Executive Order to Protect Americans’ Sensitive Personal Data.2 In furtherance of this Order, Director Chopra announced that the CFPB is “aiming to propose rules this year to ensure that data brokers comply with the Fair Credit Reporting Act.”3 “The proposals under consideration would define a data broker that sells certain types of consumer data as a ‘consumer reporting agency’ to better reflect today’s market realities. Under such a proposal, a company’s sale of data regarding, for example, a consumer’s payment history, income, or criminal records would generally be a consumer report, triggering requirements for ensuring accuracy and handling disputes of inaccurate information, as well as prohibiting other misuse.”4
Just days before these remarks, the CFPB and Federal Trade Commission (“FTC”) filed an amicus brief in the U.S. Court of Appeals for the Eleventh Circuit “addressing yet another erroneous argument from a company in the consumer reporting system.”5 The CFPB and FTC filed this brief in support of a consumer’s appeal from a district court case, where the District Court found Experian, one of the largest credit reporting agencies, was not liable for negligently violating provisions of the Fair Credit Reporting Act (“FCRA”) when it failed to reinvestigate certain disputed information contained within the consumer’s credit report. In the brief, the CFPB and FTC argue that the District Court failed to apply the correct standard when determining whether Experian negligently violated the FCRA, and Experian should be held liable for violations of the FCRA.
The CFPB and FTC are seeking greater accountability from credit reporting agencies to ensure credit reporting agency maintenance of accurate information in consumer credit reports. It is not typical for both the CFPB and FTC to collaborate on and file an amicus brief on behalf of a consumer. This proactiveness by both agencies to argue for and stress greater accountability of consumer credit reporting agencies, shows a policy movement on the part of perhaps both of agencies to address significant concerns in this space.
Earlier this week, the CFPB published key findings from recent examinations about continuing accuracy problems in the credit reporting system and continuing to prioritize examinations of consumer reporting companies and furnishers.6 The CFPB found consumer reporting companies failed to ensure the accuracy of credit reports, including by failing to exclude information resulting from alleged identity theft or human trafficking. The CFPB also found furnishers – companies that provide information to consumer reporting companies – failed to correct false or fraudulent information sent to consumer reporting companies.7
In response to these findings, the CFPB has taken regulatory and enforcement actions to strengthen the consumer reporting and furnishing systems. The CFPB launched a rulemaking to remove many types of medical debt from credit reports.8 The CFPB also issued advisory opinions to address inaccurate background check reports and sloppy credit file sharing practices.9
It is clear that the CFPB has its sights set on the consumer credit reporting industry and will be continuing its focus in this space, with particular emphasis on the protection of credit data. We will continue to monitor the CFPB’s actions and keep you updated on all relevant information.
1See, https://www.consumerfinance.gov/rules-policy/junk-fees/.
289 FR 15780. https://www.federalregister.gov/documents/2024/03/05/2024-04594/national-security-division-provisions-regarding-access-to-americans-bulk-sensitive-personal-data-and#:~:text=The%20Executive%20order%20of%20February,persons%20from%20engaging%20in%20any.
3Rohit Chopra, “Prepared Remarks of CFPB Director Rohit Chopra at the White House on Data Protection and National Security.” (Delivered on April 2, 2024). https://www.consumerfinance.gov/about-us/newsroom/prepared-remarks-of-cfpb-director-rohit-chopra-at-the-white-house-on-data-protection-and-national-security/#:~:text=Bad%20actors%20can%20use%20this,and%20other%20violations%20of%20privacy.%22.
4Id.
5Seth Frotman, “Consumer reporting companies have an obligation to correct errors,” Consumer Financial Protection Bureau. March 29, 2024. https://www.consumerfinance.gov/about-us/blog/consumer-reporting-companies-have-an-obligation-to-correct-errors/?utm_source=newsletter&utm_medium=email&utm_campaign=general_updates&utm_term=4.1.24.
6 “CFPB Finds Violations of Credit Report Accuracy Requirements, Including for Survivors of Human Trafficking,” Consumer Financial Protection Bureau (April 8, 2024). https://www.consumerfinance.gov/about-us/newsroom/cfpb-finds-violations-of-credit-report-accuracy-requirements-including-for-survivors-of-human-trafficking/#:~:text=CFPB%20examiners%20have%20found%20failures,that%20resulted%20from%20human%20trafficking..
7Id.
8“CFPB Kicks Off Rulemaking to Remove Medical Bills from Credit Reports,” Consumer Financial Protection Bureau (Sep 21, 2023). https://www.consumerfinance.gov/about-us/newsroom/cfpb-kicks-off-rulemaking-to-remove-medical-bills-from-credit-reports/.
9 “CFPB Addresses Inaccurate Background Check Reports and Sloppy Credit File Sharing Practices,” Consumer Financial Protection Bureau (Jan 11, 2024). https://www.consumerfinance.gov/about-us/newsroom/cfpb-addresses-inaccurate-background-check-reports-and-sloppy-credit-file-sharing-practices/.
