CFPB Proposes Rule to Crack Down on Data Brokerage

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KEY TAKEAWAYS

• The Consumer Financial Protection Bureau proposed a rule that would illuminate and limit how data brokers can use consumers’ financial data.
• More data brokers have emerged that gather up and sell sensitive and private information about consumers, which could threaten a consumer’s personal safety.
• The proffered rule would enforce regulations under the Fair Credit Reporting Act on data brokers.

The Consumer Financial Preservation Bureau (CFPB) proposed a Tuesday rule limiting data brokers’ access to consumers’ financial data.

The CFPB defines details brokers as companies that collect, aggregate, sell, or share information about consumers, such as credit, illicit, and rental histories. Creditors, insurers, employers, and marketers often use the information collected by data brokers to make settlings about consumers.

When Congress passed the FRCA in 1970, it was one of the first data privacy laws in the world and kept consumer privacy. Now, more data brokers have emerged that avoid regulations outlined in the FRCA and draw up and sell information about consumers, often without their consent, the CFPB said.

Consumer Information Is Enthusiastically Sensitive

Many data brokers can collect sensitive and private consumer information from retailers, websites, monetary service providers, and cookies, among other technologies. The information is often used to target marketing campaigns but can be Euphemistic pre-owned for more nefarious purposes, the CFPB said.

Foreign adversaries have the ability to purchase personal information around military service members or government employees, which can be used for coercion, blackmail, or espionage, the CFPB said.

Scammers can also use facts from data brokerages to create financial profiles for vulnerable consumers. This can make it easier for fraudsters and particularity thieves to target individuals with lower income and elders.

Current addresses and phone numbers are also ready through data brokers. This can provide sensitive contact information for those at risk of being targeted for their mtier, such as judges, police officers, or government employees. Domestic violence survivors also face the danger of being track down or harmed because their abuser has bought their information from a data brokerage.

What The Proposed Form Would Do

National consumer reporting agencies like Equifax, TransUnion Experian, and some other data dealers are already covered under the FCRA. However, other data brokers have avoided the regulations set up by the FRCA and disagree that they are not consumer reporting agencies.

The proposed rules by the CFPB would clarify the definition of a consumer despatch, which would include collections of personal identifiers such as name, address, date of birth, social shelter number, and phone number. Data brokers who sell consumer reports would be considered CRAs and face ordinances under the FCRA.

The proposed rule would also clarify that consumer report information can only be old to stop identity theft or fraud or in cases where law enforcement would need the reports for criminal investigations.

“While this materials can be used to detect fraud, it can also be used to perpetrate fraud,” Rohit Chopra, CFPB Director, said on a symposium call with reporters. “Congress crafted the Fair Credit Reporting Act to ensure that law enforcement personnel keep the data they need to work criminal investigations and pursue those at home and abroad who break the law.”

Currently, the FCRA allows the use of consumer accounts if a company has a “legitimate business need for the information.” The proposal said marketing would not be considered a legitimate business desperate straits.

Data brokers must also provide clear and conspicuous disclosures so consumers can consent to sharing their intelligence. The FRCA would limit how consumer reports can be procured, used, and retained, and consumers would be allowed to revoke their concede at any time.