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CFPB to Supervise Credit Bureaus: Another Avenue for Enforcement of FCRA Privacy Protections

Michael Epshteyn

27 July 2012
Under regulations adopted earlier this month by the Consumer Financial Protection Bureau (“CFPB”), the nation’s larger consumer reporting agencies (“CRAs”) will for the first time be subject to supervision at the federal level.  The new rules were issued pursuant to the CFPB’s authority under section 1024 of the Dodd-Frank Wall Street Reform and Consumer Protection Act to supervise nonbank “larger participants” in the markets for consumer financial products and services.
CFPB to Supervise Credit Bureaus: Another Avenue for Enforcement of FCRA Privacy Protections

Although CRAs have been subject to regulation and enforcement under the federal Fair Credit Reporting Act (as well as state laws governing consumer reporting activities), until now the industry has avoided the type of ongoing supervision and examination that apply to banking institutions. Under its section 1024 authority, the CFPB can require supervised entities to submit reports and undergo examinations in order to: (1) assess compliance with federal consumer financial law; (2) obtain information about the entities’ activities and compliance systems or procedures; and (3) detect and assess risks to consumers and to consumer financial markets.

Under the new regulations, which go into effect on September 30, 2012, the CFPB will supervise CRAs that have more than $7 million in “annual receipts” from consumer reporting activities.  The CFPB has estimated that this supervisory authority will extend to 30 companies that collectively account for about 94 percent of the industry, including the three major CRAs: Equifax, Experian, and TransUnion.  These three companies issue more than 3 billion consumer reports a year and maintain files on more than 200 million Americans.

Although the CFPB initially proposed to extend the “larger participants” rule to debt collectors as well as consumer reporting agencies, the agency has postponed issuance of the final debt collection rule until the fall. The CFPB has described the final rule as “the first in a series of rules to define larger participants of other markets.” In connection with issuance of the new regulations, the CFPB has posted a fact sheet regarding its supervision of the credit reporting industry.

Michael Epshteyn

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