A proposed rule to extend the Fair Credit Reporting Act’s identity theft protections to certain negative information on the credit reports of financial abuse victims is not the appropriate vehicle to address the problem, the American Bankers Association said today in a letter to the Consumer Financial Protection Bureau.
The CFPB last year issued an advanced notice of proposed rulemaking to amend the definitions of “identity theft” and “identity theft report” in Regulation V, which implements the FCRA, to include information stemming from transactions that occurred “without the consumer’s effective consent.” In a statement, the bureau said abusers often use coerced debt as a tool of control, forcing their partners or family members to take out credit cards or loans through threats, physical violence or manipulation.
ABA commended the CFPB for seeking to protect victims of economic abuse but said the proposed rule would exceed the bureau’s statutory authority, risk significant harm to the credit reporting and broader financial system, and impose unjustified operational and compliance challenges. The association instead suggested the bureau seek authorization from Congress.
“Banks are not equipped to adjudicate nuanced and deeply personal issues such as whether an individual’s consent was influenced by emotional manipulation, threats, or interpersonal pressure,” ABA said. “Even with significant investments in personnel training and compliance protocols, banks lack the expertise or legal authority to make determinations about consumers’ private relationships, motivations or states of mind.”
