The CFPB has announced plans to implement significant changes to the Fair Credit Reporting Act (FCRA), which could have major implications for data brokers, furnishers, and end users.
Late Thursday, the CFPB revealed proposals aimed at restricting how companies access consumer data under the FCRA. Key changes include eliminating medical debt from credit reports, prohibiting the sale of data for non-permissible purposes, and extending FCRA requirements to data brokers and aggregators.
These proposals stem from an inquiry conducted by the CFPB in March that investigated data brokers and the types of information they collect and sell. The bureau’s recommendations were influenced by over 7,000 comments received during that inquiry.
In the announcement, CFPB Director Rohit Chopra emphasized that removing medical data from credit scores would help eliminate inaccuracies, mitigate coercive debt collection practices, and enhance the predictiveness of credit scoring.
However, the prospect of imposing FCRA requirements on previously exempt entities such as data brokers and aggregators has raised concerns among banks and financial firms. This change would mean that many companies not traditionally involved in credit decision-making could now be categorized as credit reporting companies.
Currently, the sale of credit report data is strictly regulated, only permitted for specified purposes as defined by Congress. If the proposed changes are enacted, credit report data would be restricted from being sold for non-permissible purposes. Additionally, should data brokers and aggregators fall under the FCRA, they would be required to allow consumers to access and dispute their data, potentially disrupting existing fraud prevention and customer identity verification systems, as well as opening the possibility for class action lawsuits against data furnishers, such as banks.
The CFPB’s proposal has been submitted for initial feedback to a panel of small businesses organized under the SBREFA. A final rule is anticipated, but not before 2025.