WASHINGTON, D.C. – The Financial Technology Association (FTA) today urged the Consumer Financial Protection Bureau (CFPB) to withdraw its proposed “data broker” rule amending Regulation V, which implements the Fair Credit Reporting Act (FCRA). This proposed rule exceeds the statute’s mandate, duplicates existing frameworks concerning data use, and could hinder financial institutions’ efforts to detect and prevent fraud.
“One of the most important consumer protections is fraud prevention, and this proposal would make it harder to stop bad actors from harming consumers,” said Penny Lee, President and CEO of the Financial Technology Association. “We must ensure financial institutions have the appropriate tools to combat fraud while upholding strong consumer protection and privacy standards.”
FTA outlined several concerns with the proposal, including the determination that credit-header data constitutes a consumer report, which has no basis under the statute. Fraud prevention tools rely heavily on this data, and including it under the rule would have a detrimental impact on dynamic fraud models. Relatedly, the proposal also covers consumer-permissioned and deidentified data, which would hinder consumers’ ability to access the world of digital financial apps and services, including tools that increase access to credit for underserved consumers. The proposal would also introduce unnecessary friction that could jeopardize consumers’ access to innovative financial services.
Consumers are entitled to high levels of data stewardship from companies when sharing their personal financial information. FTA members adhere to privacy principles, including transparency, consumer control, data minimization, and modern data security standards, and are subject to a broad array of laws, regulations, and guidance. Any future actions regarding the use of data should account for the various data-related frameworks already in place.
To read FTA’s full comment letter in response to the request for comment on the proposed rule, click here. FTA previously expressed significant concerns with the proposal, submitting comments in response to the CFPB’s request for information and the outline of the proposed rule.
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The Financial Technology Association (FTA) is a network of fintech leaders shaping the future of finance. We champion the power of technology-driven financial services to catalyze innovation and advocate for modernized policies and regulations that reflect the digital transformation.