On September 15, 2023, the Consumer Financial Protection Bureau (CFPB) – a United States government agency that enforces the federal Fair Credit Reporting Act (FCRA) that regulates consumer reports in America – released an “Outline of Proposals and Alternatives Under Consideration for Consumer Reporting Rulemaking” to assist in FCRA Rulemaking.
“Consumer reporting agencies collect and assemble or evaluate information about, among other things, the credit, criminal, employment, and rental histories of hundreds of millions of Americans. They package this information into consumer reports, which are restricted for use typically to creditors, insurers, landlords, employers, and others,” the Outline begins.
“In 1970, Congress enacted the Fair Credit Reporting Act (FCRA), one of the first data privacy laws in the world, to regulate the consumer reporting market,” continues the Outline, which then goes on to describe the proposals and alternatives under consideration – and the representative feedback sought – by the CFPB in the following areas for FCRA Rulemaking:
- Definitions of consumer report and consumer reporting agency: The CFPB is considering several proposals related to the definitions of “consumer reporting agency” and “consumer report.” Certain of these proposals would address whether and how the FCRA applies to newer actors and practices in the credit reporting marketplace, including questions such as coverage of data brokers and certain consumer reporting agency practices regarding marketing and advertising.
- Permissible purposes: One of the FCRA’s principal goals is to protect consumer privacy. The statute seeks to accomplish this by, among other things, prohibiting consumer reporting agencies from furnishing consumer reports to third parties except for certain statutorily enumerated “permissible purposes.” The proposals under consideration would interpret certain of those permissible purposes and clarify circumstances in which data breaches may result in a consumer reporting agency violating the FCRA’s permissible purpose provision.
- Disputes: Consumer complaints to the CFPB reflect how costly, ineffective, and time-consuming the consumer reporting dispute process can be for consumers. In each of the past three calendar years, the top two most frequently identified issues in complaints submitted to the CFPB were “Incorrect information on your report” and “Problem with a credit reporting company’s investigation into an existing problem.” The CFPB is considering proposals related to two types of disputes: (1) those that are classified by a consumer reporting agency or furnisher as involving legal matters and (2) those involving systemic issues at a consumer reporting agency or furnisher.
- Medical debt collection information: The CFPB is considering proposals to (1) revise Regulation V § 1022.30(d), to modify the exemption such that creditors are prohibited from obtaining or using medical debt collection information to make determinations about consumers’ credit eligibility (or continued credit eligibility) and (2) prohibit consumer reporting agencies from including medical debt collection tradelines on consumer reports furnished to creditors for purposes of making credit eligibility determinations.
- Implementation period: The CFPB seeks to ensure that consumers promptly benefit from a final rule and that covered entities have sufficient time to implement the rule. As such, the CFPB is considering the proper implementation period for complying with a rule finalizing the proposals under consideration. To assist industry with an efficient and effective implementation of any final rule, the CFPB intends to provide guidance in the form of plain language compliance guides and aids, and by conducting meetings with stakeholders to discuss the rule and implementation issues.
“Next month, the CFPB will publish an outline of proposals and alternatives under consideration for a proposed rule. We plan to propose the rule for public comment in 2024. We look forward to obtaining public input on the proposals under consideration,” CFPB Director Rohit Chopra announced in August 2023. More materials are available on the FCRA Rulemaking Page.
The FCRA has been amended from time to time since the statute’s enactment by Congress in 1970 and imposes obligations on consumer reporting agencies, entities that provide information to consumer reporting agencies (i.e., furnishers), and users of consumer reports. The CFPB has rulemaking, enforcement, and supervisory authority to administer the FCRA.
ClearStar is a consumer reporting agency (CRA) as defined by the FCRA and a leading global Human Resources technology company specializing in background checks, drug testing, and occupational health screening. ClearStar offers employers various compliance services that include a full understanding of the FCRA. To learn more about ClearStar, contact us.
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Thomas Ahearn - Digital Content Editor
Thomas Ahearn is a Digital Content Editor at ClearStar, a leading Human Resources (HR) 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), Form I-9, identity theft, privacy, social media screening, and workplace violence.
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