In June 2022, the Consumer Financial Protection Bureau (CFPB) – a U.S. government agency that enforces the federal Fair Credit Reporting Act (FCRA) – issued an interpretive rule titled “The Fair Credit Reporting Act’s Limited Preemption of State Laws” that affirmed states could enact state-level credit reporting laws that are more strict than the FCRA.
“Given the intrusive surveillance that Americans face every day, it is critical that states can protect their citizens from abuse and misuse of data,” CFPB Director Rohit Chopra stated in a press release from the CFPB about the rule. “The legal interpretation issued today makes clear that federal law does not automatically hit delete on state data protections.”
The CFPB’s interpretive rule clarifies that the FCRA’s express preemption provisions have a narrow and targeted scope. Therefore, states retain substantial flexibility to pass laws involving consumer reporting to reflect emerging problems affecting their local economies and citizens. Accordingly, the interpretive rule makes clear:
- States retain broad authority to protect people from harm due to credit reporting issues: For example, a state could forbid a credit reporting company from including information about a person’s medical debt for a certain period of time after the debt was incurred.
- State laws are not preempted unless they conflict with the FCRA or fall within narrow preemption categories enumerated within the statute: Preemption under the FCRA is narrow and targeted. Nothing in the statute generally preempts state laws relating to the content or information contained in credit reports. It does not preempt, for instance, state laws governing whether eviction information or rental arrears appears in the content of credit reports.
The interpretive rule is part of the CFPB’s work to support the role of states to protect consumers and honest businesses. In May 2022, the CFPB issued another interpretive rule that described states’ authorities to pursue lawbreaking companies and individuals under the Consumer Financial Protection Act.
The CFPB will consider steps to promote state enforcement of fair credit reporting along with other parts of federal consumer financial protection law that include consulting with states whenever interpretation of federal consumer financial protection law is relevant to a state regulatory or law enforcement matter consistent with the State Official Notification Rule.
Enacted by the United States Congress in 1970, the FCRA, among other things, defines the permissible uses of – and establishes guidelines for the information included in – credit reports. The FCRA also creates a process for consumers to dispute information in their credit files. A copy of the FCRA is available here.
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