On April 2, at an event on data protection and national security at the White House, CFPB Director Rohit Chopra articulated potential changes to the data security regulatory landscape and announced that the bureau would require Fair Credit Reporting. He said he is considering rules to amend the law and tighten regulations. Number of data brokers trading sensitive consumer data. His remarks follow an executive order signed by President Biden five weeks ago aimed at protecting Americans' sensitive personal data from “countries of concern.”
The CFPB has traditionally focused on protecting consumers from the misuse of personal data by third parties, but it also recognizes that unchecked surveillance and data aggregation can undermine national security and individual freedoms. There is a growing consensus that yes, Chopra said. He said large-scale data breaches since 2015 have highlighted the risks inherent in large-scale data collection, with these breaches often involving foreign companies and the risk of identity theft and account information being compromised. He said that the misuse has caused huge losses.
Data brokers who aggregate and sell consumer data without their knowledge are under increasing scrutiny. The executive order specifically mentions these entities, stating that the sale of Americans' data to foreign entities poses significant risks, including privacy violations, counterintelligence, extortion, and other national security threats.
In an effort to curb these harmful practices, the CFPB aims to propose rules that would bring data brokers within the scope of the FCRA. A potential rule change would define data brokers that sell certain types of consumer data as “consumer reporting agencies.” This will subject data brokers to FCRA requirements for ensuring data accuracy, handling disputes, and prohibiting abuse.
Practice: The announcement marks a continuation of the recent trend of federal and state regulators tightening their grip on consumer data brokers by increasing rulemaking enforcement (previously reported here, here, and here). Discussed). Regarding the Fair Credit Reporting Act, the bureau has promised to introduce new regulations in the “coming months” that should have far-reaching implications across the consumer finance industry.
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