CFPB Aims to Apply Privacy Protections to Data Brokers

The Consumer Financial Protection Bureau (CFPB) will soon propose a rule that would apply privacy protections to data brokers, CFPB Director Rohit Chopra said Thursday (Sept. 19).

In remarks prepared for delivery at the Aspen Institute, Chopra said this proposed rule would give consumers more control of their own sensitive data.

“By ensuring that the Fair Credit Reporting Act’s longstanding privacy protections apply to these so-called data brokers, it will limit the unfettered flow of sensitive data that fuels the targeting of servicemembers and puts our national security at risk, while also combating financial scams, identity theft, stalking, harassing and doxing,” Chopra said.

The ability of data brokers to buy and sell data on Americans has increasing implications for national security, because “countries of concern” aim to acquire that kind of data, Chopra said.

Most high-profile data breaches have been perpetrated by state and non-state actors from overseas that want to build dossiers on Americans, he said. For example, four members of the Chinese People’s Liberation Army were charged by the Justice Department with leading an operation that targeted Equifax to obtain personal data on 150 million Americans.

Countries of concern can also purchase sensitive individualized data from data brokers and use it to compromise individuals in important positions, Chopra said.

“For example, information in a credit report about a servicemember’s level of indebtedness could easily be exploited by bad actors to pressure those who may have classified information in ways that put our national security at risk,” Chopra said.

The datasets compiled by data brokers can also fuel the risks of a growing surveillance industry that is leveraging artificial intelligence and other forms of predictive decision-making, he said.

The proposed rule will seek to protect Americans from the practices of data brokers, Chopra said.

“The Fair Credit Report Act was one of the first data privacy laws in the world, and it was enacted to address the widespread and unregulated reporting of information about people’s lives, including their bill paying history, habits, character and morals,” Chopra said.

The CFPB said in March that it had begun an investigation into data brokers and “their business practices, their impact on the daily lives of consumers, and whether they are all playing by the same rules.”

Also in March, President Joe Biden issued an executive order targeting the trade of personal data with countries deemed hostile to the United States. The executive order aims to prevent data brokers and other companies from trading sensitive data with nations identified as countries of concern.