Consumer Financial Protection Bureau & FCRA

Future of FCRA Interpretation and Enforcement

The newly created CFPB is now the primary agency responsible for interpreting the FCRA. The CFPB is vested with exclusive rulemaking authority over all federal consumer financial law – this includes the authority to issue rules under existing consumer protection statutes such as the FCRA (with limited exceptions) as well as new rules to prohibit unfair, deceptive or abusive acts or practices. The primary role of the CFPB will be supervision in order to “prevent harm to consumers from unlawful financial practices and ensure that markets for consumer financial products and services are fair, transparent, and competitive.” To accomplish this, CFPB is assembling a team of examiners that will directly observe the business practices of entities subject to CFPB jurisdiction. Examiners will assess institutions’ compliance with the FCRA and other federal consumer protection laws. According to the CFPB website, the agency will require businesses to change their practices to comply with the law and may also “require improved employee training, implementation of better policies and procedures or quality controls, and in more serious cases, monetary compensation to consumers.”

Since the adoption of the FCRA, the FTC has enforced the Act at the federal level by bringing enforcement actions against CRAs, entities that furnish information to CRAs, and users of consumer reports such as creditors and employers. The CFPB and FTC now have joint FCRA enforcement authority over a host of industries. As we noted in a previous post, the FTC is actively addressing FCRA compliance and we expect its efforts to extend beyond traditional CRAs. Earlier this year the FTC found that Social Intelligence Corporation – an Internet and social media background screening service – is a CRA subject to the FCRA. Like the FTC, we expect the CFPB will broadly interpret and actively enforce the FCRA. In so doing, the CFPB may give heavy weight to the FTC’s interpretations of the FCRA, making the staff report invaluable to businesses handling consumer report information. With new FCRA rules in place and an additional agency tasked with FCRA enforcement, businesses are wise to determine whether they are subject to the FCRA and to consider FCRA compliance.