The CFPB’s Proposed Data Broker Rule

Consumer Finance Monitor

In today’s episode, we discuss the CFPB’s recent proposed data broker rule—a proposal that would greatly expand the reach of the Fair Credit Reporting Act.

On December 3, the CFPB issued a proposed rule promoted as one that would require companies that sell data about income or financial tier, credit history, credit score or debt payments to comply with the Fair Credit Reporting Act. The proposal would make it clear that when data brokers sell certain sensitive consumer information, they are “consumer reporting agencies” under the FCRA. That would require them to comply with accuracy requirements. It also would require them to provide consumers access to their information. However, the proposal is much broader than a data broker rule, and the podcast explores the significant breadth of the proposal.

The rule might face an uncertain future, since it was issued by current CFPB Director Rohit Chopra and pushes beyond the boundaries of the FCRA. Chopra’s aggressive regulatory regime is opposed by the Trump Administration.

Joining us today is Dan Smith, president and CEO of the Consumer Data Industry Association, which represents the consumer data reporting industry.

The host of the discussion is Alan Kaplinsky, the former practice group leader for 25 years, and now senior counsel of the Consumer Financial Services Group at Ballard Spahr. Joining the discussion are two Ballard Spahr partners: Richard Andreano, the practice leader of our mortgage banking group at Ballard Spahr and John Culhane.

In this episode, we will discuss the key aspects of the landmark proposed rule, such as:

1. The proposal being much broader than one addressing the sale of personal information to various parties, including stalkers, spies and scammers.

2. The fact that the proposal does not even define what is a data broker.

3. How the proposal would significantly change the concept of what constitutes a consumer report, including the proposal to treat credit header information as a consumer report.

4. How the proposal would change the concept of what constitutes a consumer reporting agency.

5. Requirements that the proposal would add to the written authorization permissible purpose to obtain a consumer report, including requirements regarding revocation of the authorization.

6. How the proposal would modify the requirements to rely on the legitimate business need permissible purpose to obtain a consumer report.

7. Whether the CFPB actually has legal authority to essentially rewrite the FCRA.