March 24, 2023

The Consumer Financial Protection Bureau (CFPB) has begun an extensive investigation. 

The agency intends to learn more about the market that provides consumer financial data. According to the CFPB, learning more about how data brokers collect their information will allow the agency to regulate the market better. In the CFPB’s announcement, it will acquire information from financial institutions, individual consumers, data brokers, and other market participants. This diversity is part of the effort to regulate the market. 

In addition, the CFPB will include rule-making under the Fair Credit Reporting Act (FCRA). Data brokers collect, aggregate, sell, resell, and license consumer information. They use this information to create credit reports and screenings that employers, property owners, or managers can use to evaluate applicants for employment or housing. 

Sometimes data brokers make sellable consumer profiles. However, consumer advocates have expressed concerns over how data brokers obtain this information. Other concerns they voiced include how brokers use it and the fact that most people cannot choose not to have this information collected.

According to the director of the CFPB, today’s surveillance practices make it possible for companies to obtain and make money on even our most private data. As such, he hopes to use the CFPB’s obtained information to decide how the FCRA needs to be updated. 

Enacted in 1970, the FCRA governs credit reporting and protects information collected by credit reporting agencies. This Act requires only those with permissible purposes can obtain consumer reports. Acceptable causes include many legal obligations for companies that provide information to consumer reporting agencies. 

In the past, the FCRA has seen several additions. Such changes include the Fair and Accurate Credit Transaction Act and the Dodd-Frank Act. Now, the CFPB may make further changes to the Act to accommodate the market changes.

The CFPB also intends to learn where data brokers get their information and what they do with the data. They also want to determine how much data brokers rely on obtaining information from publicly available sources and the amount they purchase. In addition to this information, the CFPB will investigate restrictions that financial institutions may place concerning how brokers use this data. Finally, the CFPB will investigate which companies and entities buy from these data brokers. These investigations will include how the entities use this information and whether consumers can opt out of having their information collected.

Businesses must have accurate information when they obtain background checks for evaluating applicants. The best way to ensure an accurate background screening is to partner with a background check company you can trust.

Stay updated on all the new rules of compliance with Pre-employ’s free news resources on FCRA, EEOC, and more. Contact a Sales Rep today for more information.

Source