Consumer Reports applauds proposal to require data brokers to abide by the Fair Credit Reporting Act
WASHINGTON DC — A new rule proposed by the Consumer Financial Protection Bureau today would limit the sale and misuse of personal identifying information data brokers collect about people to prevent it from being sold to scammers and identity thieves or used without consumer consent or knowledge. Under the proposed rule, data brokers that sell financial records about people would be subject to the Fair Credit Reporting Act’s transparency and accuracy requirements and could only sell that data for legitimate purposes, such as a loan approval.
Consumer Reports praised the rule, which aims to prevent the abuse and misuse of sensitive information data brokers collect about people and routinely sell to others.
“Data brokers collect vast quantities of sensitive information about all of us and sell that information to those willing to pay for it, including crooks targeting consumers for fraud,” said Jennifer Chien, senior policy counsel on financial fairness at Consumer Reports. “The CFPB’s proposed rule puts reasonable limits on data brokers so that sensitive information like our Social Security numbers doesn’t wind up in the hands of scammers looking to steal our money.”
Data brokers assemble a wide variety of sensitive information about people such as credit card purchases, web browsing history, genetic and health data, military status, religious affiliation, and financial records. Data brokers use AI-powered tools to develop consumer profiles based on this information which are then sold to other companies, often without consumers’ knowledge, and used to make important decisions about them.
“Data brokers compile and sell detailed profiles about all of us that can make or break our ability to get a job, qualify for an affordable loan, or even lease an apartment,” said Jennifer Chien, senior policy counsel on financial fairness at Consumer Reports. “The CFPB’s proposed rule recognizes the critical role this information can play in our lives and gives consumers the right to access their information and dispute errors just like they can do with credit reporting agencies. The rule would help ensure that the sensitive information data brokers collect and sell about us is fair and accurate and not misused in ways that can put us at risk.”
Consumer Reports had urged the CFPB to subject data brokers to the Fair Credit Reporting Act and submitted comments to the Bureau detailing the experiences of consumers who had incorrect data linked to their profiles. Consumers reported having difficulty removing information from a data broker’s repository, unsuccessful efforts to opt out of collection practices, and a range of harms associated with the collection and dissemination of their information such as spam, identity theft, fraud, and scams.
Under the rule proposed by the CFPB, data brokers are categorized as a “consumer reporting agency” if they sell information covered under the Fair Credit Reporting Act. The proposed rule clarifies that “credit header data” such as name, date of birth, and Social Security number is considered a consumer report, which closes a loophole used by data brokers to impermissibly disclose a person’s sensitive information. Data brokers would be required to get a consumer’s explicit consent before acquiring or sharing their credit information.
Contact: Michael McCauley, michael.mccauley@consumer.org