Chopra announces plans for CFPB to tighten regulations on data brokers during White House event

WASHINGTON — On Tuesday, the White House hosted a roundtable discussion to address concerning practices employed by data brokers, as part of their broader efforts to protect the privacy of American citizens.

The event brought together leaders from top consumer watchdog agencies, alongside the Consumer Financial Protection Bureau’s announcement of proposed rules under the Fair Credit Reporting Act, aimed at regulating the practices of brokers who collect and monetize customer data. As the use of artificial intelligence becomes more prevalent, data privacy has become an increasingly critical concern.

“The reliance on massive amounts of data for artificial intelligence and other predictive decision-making technologies creates financial incentives for invasive data collection and surveillance,” highlighted Chopra during his opening remarks. “There must be accountability when this data is misused or abused.”

The Fair Credit Reporting Act (FCRA) is a 1970 law designed to ensure fairness and privacy in the collection of consumer information by reporting agencies such as credit bureaus and tenant screening services. The act grants consumers access to personal records and offers a mechanism to dispute inaccurate information.

The proposed rules by the CFPB will extend the reach of the FCRA by imposing greater accountability on data brokers who sell highly sensitive information.

One key proposal is to categorize data brokers dealing in certain types of consumer data as consumer reporting agencies and their sale of data as consumer reports.

Another proposal seeks to clarify whether credit header data, which contains personal identifying information, can be considered a covered consumer report. This clarification would prevent companies from improperly disclosing sensitive contact information of individuals who prefer not to be contacted, such as survivors of domestic violence.

The CFPB’s public inquiry on brokers, launched in March, received over 7,000 responses. These responses revealed the collection and sale of lists containing information about individuals with physical and mental health conditions, unmanageable debt, or single parents.

The inquiry also exposed unconventional data sharing practices, such as sharing data from consumers’ vehicles and health apps. The misuse of data by brokers disproportionately impacts vulnerable groups such as the elderly, low-income families, people of color, military families, and other marginalized communities.

Furthermore, the combination of vast amounts of data and AI technology creates an environment where targeted scams and fraud can thrive at a large scale, as identified by the CFPB.

The CFPB intends to gather feedback from small businesses through a panel and will release rules for public comment after summarizing the feedback received from business owners.

Chopra was accompanied by Arati Prabhakar, the director of the White House Office of Science and Technology Policy; Lael Brainard, the director of the National Economic Council; Lina Khan, the chair of the Federal Trade Commission; and Brian Boynton, the principal deputy assistant attorney general for the Justice Department’s Civil Division, during the roundtable discussion.

These proposed rules by the CFPB complement the efforts of other consumer protection agencies, such as the FTC, which established the Office of Technology earlier this year to monitor the commercial surveillance economy.

“I am impressed by the work that our technologists have been doing, embedding themselves across the FTC’s investigations, rulemaking, and policy work to ensure that our actions reflect the realities of how corporations are utilizing and misusing people’s data,” commented Khan in her opening remarks.

Brainard expressed her support for the CFPB’s proposals, which aim to protect vulnerable consumers from targeted fraud and scams. “We commend the steps taken by the Consumer Financial Protection Bureau to halt the unlawful collection and sale of sensitive data affecting millions of Americans,” she stated.