The Consumer Financial Protection Bureau (CFPB) recently broadcasted plans for extensive rule-making proposals to update the scope of the Fair Credit Reporting Act (FCRA). Hinting at arguably one of the most dramatic shifts in FCRA coverage in decades, the CFPB’s initiative was laid out in an outline published on September 15, 2023. The primary goal behind it was to extend the applicability of the FCRA to data brokers, data aggregators, and alternative data sources (FCRA Proposal). This initiative was an endeavor by Eversheds Sutherland (US) LLP, the global legal practice that aids businesses in realizing their commercial objectives.
The CFPB’s plans mark a significant extension of FCRA’s purview. The Act has traditionally been designed to promote accuracy, fairness, and privacy of information in the files of every “consumer reporting agency”, but with the proposed changes, the Act would now oversee the practices of data brokers and aggregators. This would make them liable to conform to specific standards, as well as answerable for any data inaccuracies or violations.
How this proposed change impacts the industry will, of course, depend on several factors, including how the revised legislation is ultimately worded, how it is interpreted by the courts and how rigorously it is enforced by the regulators. Nevertheless, the unveiling of the proposal itself underlines the CFPB’s dedication to consumer protection amid rapid technological advancements and sophisticated data processing systems.
The complete details and future implications of the rulemaking proposal are yet to be published, and how these changes will reshuffle the credit reporting ecosystem remains a speculative question. It is also yet to be seen how these proposed changes will be received by businesses, especially those heavily dependent on data brokering, and how they decide to adapt to these potentially game-changing regulations.
Further details about this CFPB rule-making proposal can be found here.