A proposed rule by the Consumer Financial Protection Bureau to expand consumer reporting regulations to consumer-identifying information would reduce banks’ ability to detect and prevent fraud and identity theft, the American Bankers Association said in a letter to the CFPB.
The CFPB last year proposed treating “consumer identifiers” such as names, addresses and Social Security numbers as “consumer reports” under the Fair Credit Reporting Act, whether or not they are accompanied by credit information. It also proposed defining data brokers and other entities as “consumer reporting agencies” when they sell this information, potentially including bank service providers that use consumer information to help detect and prevent fraud and identity theft. In its comments to the bureau, ABA said that while it supports the objective of protecting consumers from potential misuse of personal information by data brokers and others, the FCRA is not the right tool to accomplish that goal.
“The CFPB’s proposal to use the FCRA for this purpose exceeds the agency’s statutory authority and would have harmful, unintended consequences,” the association said. “ABA urges the CFPB to withdraw the proposal.”
ABA also raised concerns that the proposed rule would restrict additional consumer-friendly uses of data, including providing consumers with identity-monitoring and credit-monitoring products as well as testing to ensure the accuracy of the models banks use for risk-management, fraud-prevention, fair-lending analysis and other critical functions.
