CFPB enhances data privacy for Americans

The Consumer Financial Protection Bureau (CFPB) has issued a new data privacy regulation outlining how companies can use and share credit and background reports under the Fair Credit Reporting Act.

Americans are subject to “round-the-clock surveillance by large commercial firms seeking to monetize their personal data”, according to CFPB director’s Rohit Chopra.

However, credit reporting companies and users of credit reports now have specific obligations to protect the public’s data privacy and could face criminal liability for certain misconduct.

A credit reporting company can no longer use name-only matching procedures as the items of information appearing on a credit report may not all correspond to a single individual.

The new regulation also aims to eliminate the possibility of credit companies providing a report on the wrong person. Consequently, credit reporting companies cannot provide reports on multiple individuals.

Additionally, it states that disclaimers about insufficient matching procedures do not cure permissible purpose violations.

Disclaimers will not “cure a failure” to take reasonable steps to ensure credit report information is only about the individual for whom the user has a permissible purpose, the CFPB explained.

Issued in 1970, the Fair Credit Reporting Act ensures that companies cannot check an individual’s personal information, including their credit history, without genuine reason. An example of a genuine reason is a bank requesting a credit report to establish the terms it will offer someone for a line of credit.

The CFPB will continue to take steps to ensure credit reporting companies adhere to the Fair Credit Reporting Act. It recently identified the credit reporting companies that the public can hold accountable, allowing people to take action if a firm is violating the Fair Credit Reporting Act.

The new regulation comes amid calls for the CFPB to rescind the recent amendment made to its examination manual to reflect its view that discrimination can be included under its remit to tackle “unfair” practices.