The U.S. Consumer Financial Protection Bureau (CFPB) is planning a crack-down on data brokers, with stricter rules on their use of data.
It plans to update the Fair Credit Reporting Act (FCRA), which governs the privacy of consumer data collected by consumer reporting agencies such as credit bureaus and tenant screening services provided to lenders. It gives consumers access to their personal records and allows them to dispute inaccurate information.
The new proposals involve bringing data brokers under this legislation by defining them as a ‘consumer reporting agency’, meaning tighter controls over the use of certain data.
“The CFPB is considering a proposal that would generally treat a data broker’s sale of data regarding, for example, a consumer’s payment history, income, and criminal records as a consumer report, because that type of data is typically used for credit, employment, and certain other determinations,” said CFPB director Rohit Chopra at the White House Roundtable on Protecting Americans from Harmful Data Broker Practices.
“This would trigger requirements for ensuring accuracy and handling disputes of inaccurate information, as well as prohibit misuse.”
A second proposal aims to clarify the situation over whether or not so called “credit header data” should be classified as a consumer report.
The CFPB points out that much of the current data broker market runs on personally identifying information taken from traditional credit reports from the likes of Equifax, Experian, and TransUnion. This includes key identifiers like name, date of birth, and Social Security number.
And there are concerns that sharing this data puts certain groups disproportionately at risk, with CFPB research having found that the elderly, low-income families, people of color, military families and other marginalized groups were more likely to be affected.
“The CFPB expects to propose to clarify the extent to which credit header data constitutes a consumer report, reducing the ability of credit reporting companies to impermissibly disclose sensitive contact information that can be used to identify people who don’t wish to be contacted, such as domestic violence survivors,” said Chopra.
The proposals are something of a victory for privacy organizations, which earlier this year urged the CFPB to take these steps.
“Data brokers have taken advantage of these data loopholes to profit immensely from selling the personal information of anyone and everyone,” says Laura Rivera, senior staff attorney with Just Futures Law.
“This is a huge step in protecting our privacy, civil liberties, but most importantly the people whose lives are impacted by their sensitive data being sold to the highest bidder.”
The CFPB plans next month to publish an outline of proposals and alternatives, and says it is looking for input from small businesses. The rule should go out for public comment next year.
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