Why This Story Matters:
In December 2024, the Consumer Financial Protection Bureau (CFPB) proposed a rule that would ensure that the strong privacy protections of the Fair Credit Reporting Act (FCRA) would safeguard consumers from so-called “data brokers” that collect and sell their consumer data. Enacted in 1970, the FCRA regulates background checks in the United States.
Update (3/5/2025):
The Consumer Financial Protection Bureau (CFPB) – which enforces the Fair Credit Reporting Act (FCRA) – has extended the public comment period for its proposed rule on applying the FCRA to “data brokers” from March 3, 2025, to April 2, 2025, “to allow interested persons more time to consider and submit their comments,” according to a Notice in the Federal Register.
On March 5, 2025, the CFPB published the proposed rule for “Protecting Americans From Harmful Data Broker Practices (Regulation V); Extension of Comment Period” in the Federal Register explaining that the CFPB determined that extending the comment period until April 2, 2025, was appropriate. This proposed rule also included methods for submitting comments.
CFPB Proposes Rule to Ensure FCRA Safeguards Consumers From “Data Brokers”
On December 3, 2024, the Consumer Financial Protection Bureau (CFPB) – which enforces the Fair Credit Reporting Act (FCRA) that regulates background checks in the United States – proposed a rule that would ensure the FCRA’s privacy protections safeguard consumers from “data brokers” that collect and sell consumer data, according to a CFPB news release.
The proposed rule would make clear that when data brokers sell certain sensitive consumer information they are “consumer reporting agencies” under the FCRA, requiring them to comply with accuracy requirements, provide consumers access to their information, and maintain safeguards against misuse. Comments on the proposed rule must be received by March 3, 2025.
The proposed rule would limit the sale of personal identifiers like Social Security Numbers (SSNs) and phone numbers collected by certain companies and make sure that people’s financial data such as income is only shared for legitimate purposes, like facilitating a mortgage approval, and not sold to scammers targeting those in financial distress.
“Data brokers – the outfits that collect and sell detailed information about our personal and financial lives – are making this data available to anyone willing to pay. Today, the Consumer Financial Protection Bureau is proposing action to stop data brokers from enabling scammers, stalkers, and spies,” CFPB Director Rohit Chopra said in prepared remarks about the rule.
CFPB Proposed Rule Would Ensure Data Brokers Comply With FCRA
The CFPB’s proposed rule would ensure data brokers comply with the FCRA and address critical threats from current data broker practices, including national security and surveillance risks, criminal exploitation, and violence, stalking, and personal safety threats to law enforcement personnel and domestic violence survivors. To address these risks, the proposed rule would:
- Treat data brokers just like credit bureaus and background check companies;
- Protect consumers’ personal identifiers from abuse and misuse; and
- Require clear consumer consent for data sharing.
The U.S. Congress enacted the FCRA in 1970 to strictly limit the use of personal data by a growing data surveillance industry. The CFPB’s proposed rule would ensure that the FCRA’s strong privacy protections safeguard consumers from modern day data brokers that rely on emerging technologies and newer business models to collect and sell consumer data.
The CFPB developed this proposed rule based on extensive market monitoring that revealed widespread evasion of consumer protections. The CFPB found that data brokers routinely sidestep the FCRA by claiming they aren’t subject to its requirements – even while selling the types of sensitive personal and financial information Congress intended the law to protect.
ClearStar Helps Employers Comply With FCRA Requirements
ClearStar – a consumer reporting agency specializing in background checks, drug testing, and occupational health services – is the only screening firm providing a real-time compliance solution. ClearStar’s Assured Compliance® program manages local, state, and federal (FCRA) notice, disclosure, consent, and adverse action requirements for job candidates. Features include:
- Real-Time Compliance: One size does not fit all. Disclosures, notices, and consents are presented to candidates in a fully automated solution as required by local, state, and federal (FCRA) laws.
- Dynamic Disclosures: Candidates are presented only with relevant disclosures based on where they live and will be working to minimize confusion.
- Adverse Action Management: ClearStar’s robust adverse action management module minimizes compliance challenges for employers and makes navigating complicated requirements a breeze, even in jurisdictions requiring additional steps.
- Updated as Laws Change: Compliance with local, state, and federal laws is a constantly changing landscape that can be challenging. ClearStar publishes a monthly compliance update and adapts our technology in response to regulatory and legislative changes.
- Strong and Clear Audit Trail: A transparent process is important. Candidates can access a copy of their specific notices, disclosures, and the consent they signed. This also creates a reliable audit trail for employers.
- ClearStar is Global: Our technology supports candidates who have lived or worked outside of the United States.
ClearStar is a global Human Resources technology company offering “better, easier, faster, and safer” background screening solutions. ClearStar has provided innovative technology solutions to businesses in the human capital management industry from its corporate offices in Alpharetta, Georgia, since 1995. For more information, contact ClearStar.
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Thomas Ahearn - Digital Content Editor
Thomas Ahearn is a Digital Content Editor at ClearStar, a leading Human Resources technology company specializing in background checks, drug testing, and occupational health screening. He writes about a variety of topics in the background screening industry including Artificial Intelligence (AI), "Ban the Box," class action lawsuits, credit reports, criminal records, drug testing, Equal Employment Opportunity Commission (EEOC), Fair Credit Reporting Act (FCRA), identity theft, privacy, social media screening, and workplace violence.
At ClearStar, we are committed to your success. An important part of your employment screening program involves compliance with various laws and regulations, which is why we are providing information regarding screening requirements in certain countries, region, etc. While we are happy to provide you with this information, it is your responsibility to comply with applicable laws and to understand how such information pertains to your employment screening program. The foregoing information is not offered as legal advice but is instead offered for informational purposes. ClearStar is not a law firm and does not offer legal advice and this communication does not form an attorney client relationship. The foregoing information is therefore not intended as a substitute for the legal advice of a lawyer knowledgeable of the user’s individual circumstances or to provide legal advice. ClearStar makes no assurances regarding the accuracy, completeness, or utility of the information contained in this publication. Legislative, regulatory and case law developments regularly impact on general research and this area is evolving rapidly. ClearStar expressly disclaim any warranties or responsibility or damages associated with or arising out of the information provided herein.
