The Consumer Financial Protection Bureau (CFPB) announced this week that it is launching an inquiry into the business practices of data brokerage firms to learn whether their impact on consumers can inform planned rulemaking under the Fair Credit Reporting Act (FCRA).
In its request for information (RFI), the CFPB is attempting to learn the full scope of data brokers, their business practices, the potential impacts on the daily lives of consumers and whether they are all operating on the same set of rules, the Bureau said.
“This request is a chance for the public to share feedback about companies that play a significant role in people’s lives and in the economy,” the RFI announcement states. “This feedback will shed light on the current state of an industry that largely operates out of public view, and inform the CFPB’s future work to ensure that these companies comply with federal law.”
CFPB Director Rohit Chopra said this is necessary to determine whether the FCRA has more specific applications to data brokerage business practices.
“Modern data surveillance practices have allowed companies to hover over our digital lives and monetize our most sensitive data,” Chopra said. “Our inquiry will inform whether rules under the Fair Credit Reporting Act reflect these market realities.”
The FCRA, passed by Congress in 1970 and signed into law by President Richard Nixon, is intended to protect consumers from the inclusion of willfully incorrect or inaccurate credit report data. The FCRA regulates the collection, dissemination, and use of consumer information, including consumer credit information, and is enforced by agencies including the CFPB and Federal Trade Commission (FTC).
Because data brokerages could have an impact on financial decisions, including the purchase of a new home, the CFPB wants to assess whether the information collected by data brokerages could be sold to companies that would impact a consumer’s ability to access credit.
“Public input will shed light on the current state of a $200-billion dollar global industry that largely operates out of public view, and inform our future work to ensure that these companies comply with federal consumer financial laws—including, but not limited to, [FCRA] and the Consumer Financial Protection Act,” the CFPB said in a statement.
The RFI will be published in the Federal Register and remain active through June 13.
The CFPB also recently issued an RFI on Regulation Z’s mortgage loan originator rules and took aim at what it calls “junk fees” collected by mortgage servicers.