WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) has announced a proposed rule aimed at regulating data brokers who sell sensitive personal and financial information, introducing stricter protections under the Fair Credit Reporting Act (FCRA). These measures are designed to address both privacy concerns and national security risks.
The rule seeks to classify data brokers as consumer reporting agencies under the FCRA when they sell information such as Social Security Numbers, income details, and credit histories. This would subject these entities to stringent requirements, including data accuracy, consumer access to information, and enhanced safeguards against misuse. “The CFPB’s proposed rule will curtail these practices that threaten our personal safety and undermine America’s national security,” said CFPB Director Rohit Chopra.
National Security and Consumer Protections
The CFPB’s proposal identifies multiple risks posed by the data broker industry. Personal data, including information about military personnel and government employees, can be purchased by foreign adversaries such as China or Russia, posing espionage and surveillance threats. Additionally, criminals frequently exploit detailed consumer profiles to execute fraud schemes targeting vulnerable populations, such as senior citizens and individuals in financial distress.
Personal safety is another key concern. Sensitive information sold by brokers can be used to track or harass individuals, including law enforcement officers, judges, and domestic violence survivors, increasing the risk of violence.
Proposed Safeguards
The new rule would introduce several measures to protect consumers from these risks. Data brokers would face the same regulatory oversight as credit bureaus and background check companies, ensuring compliance with FCRA protections regardless of how the information is marketed. Companies would also be required to obtain explicit consumer consent for data sharing, addressing long-standing criticisms about opaque data-handling practices.
These safeguards aim to prevent data brokers from sidestepping FCRA requirements while continuing to sell highly sensitive consumer information. The regulation would also preserve government agencies’ access to necessary data for law enforcement, counterintelligence, and counterterrorism purposes, ensuring public safety remains a priority.
Broader Implications
This rule marks another step in a broader government initiative to strengthen data privacy protections. It aligns with recent Executive Orders and actions by other agencies, including an October proposal from the Department of Justice aimed at restricting access to Americans’ sensitive information by nations of concern.
The CFPB’s proposal aims to combat the misuse of personal data in an era where technological advancements have made consumer information more vulnerable than ever. If implemented, the rule could significantly transform the data broker industry while bolstering privacy, national security, and consumer protections.
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