Hello. Welcome to another clearly conspicuous podcast. As mentioned in previous sessions, the goal of these podcasts is to succeed in this very proactive and progressive environment and to bring awareness to what’s going on with federal and state consumer protection agencies. , is to provide practical tips for success. It’s an honor to be with you today.
CFPB proposes rules to protect citizens from data brokers
Today we discuss the CFPB’s preparation to issue rules governing data broker practices under the Fair Credit Reporting Act. So let’s start with what the CFPB does. The CFPB plans to propose rules to ensure the public is protected from data brokers. The proposals under consideration would provide that data brokers and other companies in the surveillance industry would be subject to the Fair Credit Reporting Act in a variety of ways, including when they sell certain types of consumer data. Therefore, viewing this type of personal data for any reason other than “permitted purposes” is generally illegal. In March 2023, the CFPB launched a public inquiry into data brokers, soliciting comments on its experiences with and business practices with these companies through requests for information. Commenters focused on protecting sensitive information, called for more accountability, and warned about AI applications. The industry has been a consistent source of consumer complaints against the CFPB, and it has taken a number of recent steps to address issues in the surveillance industry.
What is a data broker?
So let’s ask, what is a data broker? Data broker is an umbrella term that describes companies that collect, aggregate, resell, license, or share consumers’ personal information with other parties. Data brokers include companies that specialize in background checks and credit report generation, marketing and advertising, building and improving proprietary algorithms, credit and insurance underwriting, consumer-approved data reporting, and fraud prevention. Activity detection, criminal background checks, identity checks, and people search databases. The CFPB has found that harm to consumers is caused by data brokers. Government agencies, technology and privacy experts, financial institutions, consumer advocacy groups and others have identified significant privacy and security risks, the promotion of harassment and fraud, a lack of consumer knowledge, and a lack of consumer knowledge. We identify numerous consumer harms and abuses related to data broker operations. Consent and the spread of inaccurate information.
What the Fair Credit Reporting Act stipulates
Let’s talk about the governing law, the Fair Credit Reporting Act. In 1970, Congress enacted the Fair Credit Reporting Act, which established that consumer reporting agencies play an important role in collecting and evaluating consumer credit and other information about consumers. This law established a comprehensive set of rules to govern the practices of consumer reporting agencies, including:
- Prohibition on the Use or Distribution of Certain Personal Data Other than Certain Permissible Purposes Specified by Congress
- Require consumer reporting agencies to ensure maximum accuracy
- Providing consumers with the right to inspect their data
- Provide due process to challenge false data
Next steps for the CFPB
So what’s the next step? The CFPB has convened a small business review panel and is receiving feedback from small business panelists. Prior to the panel meeting, the CFPB will send a summary of the proposals under consideration to the panelists, which will be made available for public review. After receiving feedback from these panelists, the CFPB issues a report summarizing the feedback. In response to the report, the CFPB will issue a notice of proposed rulemaking and provide the public with an opportunity to comment on the proposed rule. After considering these comments, the CFPB may make changes to the proposed rule before issuing the final rule.
Important points
Here are the important points. As always, stay tuned to the CFPB for developments. The CFPB may create initiatives with implications beyond the financial services industry, and we look forward to seeing how current legislation is used to address current technological developments. So stay tuned for future programs that identify and address key development issues and provide strategies for success. I wish you all continued success and a meaningful day. thank you.
