CFPB Announces Plans to Regulate Data Brokers & Protect Consumer Privacy at White House Roundtable

The Consumer Financial Protection Bureau (CFPB) is set to establish new regulations governing data brokers, with the aim of safeguarding consumer data and privacy. The move follows concerns about the misuse of personal information by data brokers, which has the potential to impact crucial decisions such as employment and financial approvals.

The Consumer Financial Protection Bureau (CFPB) has unveiled its intention to create comprehensive regulations targeting data brokers, as part of a broader effort to ensure the protection of consumer privacy and data security. The announcement comes in the wake of a roundtable discussion held at the White House, where experts and officials gathered to address the challenges posed by data brokers and their potentially harmful practices.

Director of the CFPB, Rohit Chopra, emphasized the importance of establishing boundaries to protect individuals against intrusive data practices, paralleling historical efforts to safeguard citizens' privacy. With modern technology and artificial intelligence increasingly relying on vast amounts of personal data, there's a growing need for accountability when it comes to the collection, use, and sharing of sensitive information.

The CFPB's initiative is driven by its recognition of the potential risks associated with data brokers operating in the surveillance industry. An inquiry into the practices of these brokers revealed gaps in accountability and oversight, prompting the CFPB to propose the creation of new rules aimed at preventing the misuse and abuse of personal data.

The agency's proposed regulations will target the practices of modern-day digital data brokers, with a particular focus on the protection of sensitive consumer information. The rules will strive to ensure that data brokers are not exploiting personal data without proper consent or utilizing it for inappropriate purposes. These rules, once established, will be enforced by the CFPB, as well as other relevant federal and state agencies.

Key proposals under consideration include:

1. Reclassifying Data Brokers: The CFPB is contemplating a proposal that would categorize data brokers that sell specific types of consumer data as "consumer reporting agencies." This reclassification would help align regulations with the current market landscape and subject data brokers to requirements that ensure accuracy, dispute resolution, and prohibit misuse of consumer data.
2. Clarifying "Credit Header Data" Classification: The CFPB aims to address the confusion surrounding the classification of "credit header data" as a consumer report. By offering a clearer definition of what constitutes a consumer report, the CFPB intends to limit the disclosure of sensitive contact information and protect individuals' privacy.

Director Chopra indicated that the forthcoming regulatory outline will be published in the next month, outlining the specific proposals and alternatives under consideration for the proposed rule. The CFPB is planning to actively engage small businesses to ensure a comprehensive understanding of the potential impacts of the regulations. A proposed rule will be opened for public comment in 2024, inviting feedback from stakeholders and the public.

As concerns about data privacy continue to grow, the CFPB's move to regulate data brokers is a significant step towards fostering transparency, accountability, and consumer protection in an era marked by the increasing reliance on personal data for decision-making processes.