In a decisive move to rein in the data broker industry, the Consumer Financial Protection Bureau (CFPB) unveiled a draft rule Tuesday that would extend the stringent consumer protections of the Fair Credit Reporting Act (FCRA) to these often-overlooked entities. With this proposal, the CFPB aims to close loopholes exploited by brokers selling sensitive financial data under the guise of exemption from FCRA obligations.
CFPB Data Brokers Regulation : Targeting Loopholes
CFPB Director Rohit Chopra didn’t mince words, describing the industry’s practices as a “widespread evasion” of the 1970 statute. “Companies routinely sidestep the FCRA by claiming exemptions, even while trading in highly sensitive financial and personal data,” Chopra said. The proposed rule seeks to impose the same rigorous standards faced by credit bureaus on data brokers selling consumer credit histories, debt payments, and income details.
By categorizing such brokers as “consumer reporting agencies,” the rule mandates adherence to FCRA requirements for accuracy, transparency, and limited disclosure. For instance, brokers selling income data would need a permissible purpose, such as evaluating mortgage applications, to avoid regulatory violations.
Cracking Down on Credit Header Data
Among the most contentious elements of the proposal is the classification of credit header data—names, addresses, Social Security numbers, and other identifiers—as regulated under the FCRA. Currently sold with minimal oversight, this data has been flagged by consumer advocates as a gateway for scammers, abusers, and even foreign adversaries.
