January 3, 2025
The Consumer Financial Protection Bureau (CFPB) recently issued a proposed rule that would amend the laws implementing the Fair Credit Reporting Act (FCRA). This proposed rule would help consumers by limiting data brokers’ ability to sell consumers’ personal or financial information. The proposed rule, CFPB-2024-0044, would amend the FCRA to ensure that it protects your sensitive information as intended.
One significant change CFPB-2024-0044 would introduce is the regulations data brokers must follow. According to the proposed rule, data brokers would fall under the FCRA and adhere to similar regulations as background check providers and credit bureaus. The CFPB believes this regulation is crucial to help prevent the possible misuse of sensitive consumer information. Such misuse includes criminal activities like financial scams or identity theft.
Implementing CFPB-2024-0044 would significantly impact companies that sell relevant information, as it would classify them as consumer reporting agencies (CRAs). Impacted companies would include those that sell information concerning a consumer’s credit score, income, debt payments, or credit history. This classification would apply regardless of how or why buyers use the information.
The new regulation also expands the definitions of “assembles” and “evaluates” for CRAs. As such, any entity that assembles and evaluates information by collecting, gathering, retaining, appraising, assessing, contributing, or altering the content of information about consumers counts as a consumer reporting agency. In addition, CFPB-2024-0044 could consider stores or organizations that collect information about you for payments as CRAs.
Another change by the proposed rule would limit permissible purposes, which could significantly benefit consumers. It prevents entities that use consumer information from “solicit[ing] the consumer for a transaction the consumer did not initiate or… otherwise market[ing] products or services to the consumer.”
CFPB-2024-0044 would also require regulated companies, including data brokers, to obtain a consumer’s explicit consent before obtaining or sharing a consumer’s credit report. It requires them to receive explicit permission as a separate document; companies cannot include it in another document. This requirement ensures you understand what you will agree to when someone obtains a credit report on you.
Under the current rules, you could inadvertently allow someone to obtain a report despite the authorization appearing in an unrelated document. This practice enabled data brokers to acquire significant information about you, which companies could use for employment purposes.
Unlike credit bureaus and background check companies, the current laws do not strictly regulate data brokers. As such, the CFPB proposed CFPB-2024-0044 to address this loophole and protect consumers better. CFPB-2024-0044 taking effect could significantly help you protect your sensitive information. It would also ensure you better understand how and when companies use your information.
It is always best to know what information is available about you, especially when looking for a job. One way to see what information employers may obtain is to run a self-background check. Self-checks allow you to correct any incorrect information and prepare to explain any negative information they may find.
Background checks don’t have to be complicated. Try running a self background check today and give yourself a head start.