The Consumer Financial Protection Bureau (CFPB) wants financial institutions to provide consumers with expanded access to their financial records. To that end, in October of 2022, the CFPB published an Outline of Proposals (Outline) detailing how a future rulemaking on this topic might look. The impact of the CFPB's proposal goes well beyond the subset of data providers that meet the definition of a "financial institution." Further, if left unchanged, the Proposals would put consumers' privacy at greater risk and force small businesses out of the market.
To highlight these unintended consequences, on January 25, 2023, the Consumer Relations Consortium (CRC) submitted a comment prepared by Legal Advisory Board Members Joann Needleman of Clark Hill and Jessica Klander of Bassford Remele.
The CRC's comment raised the following concerns:
Regulatory Overlap: The scope of the proposed rulemaking is expansive and will significantly impact all aspects of the financial services industries. The industry is already significantly regulated by a myriad of regulations and laws implemented by the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Federal Trade Commission. To best serve the consumers and respective stakeholders, the CFPB should partner with the regulatory agencies already tasked with this oversight to devise, vet, and implement a broad set of principles that can work in tandem rather than taking a siloed approach that will ultimately be unworkable.
Data Security: The Outline does not clearly address processes or procedures for how personal financial data will be delivered to the consumer; however, it implies that such data must be delivered directly to the consumer. This is problematic because most consumers do not have the infrastructure or wherewithal to implement the safety precautions necessary to maintain the privacy of their data. As a result, sensitive consumer information will have a greater risk of exposure. Any proposed rule should focus on enhancing the authorization process rather than ensuring the direct delivery of data to the consumer.
Competition: The CFPB stated part of the reason for its proposal was to foster competition. However, the complexity of the Outline and proposed rulemaking will not foster competition because the barrier to entry is simply too great. Instead, it will drive small businesses which lack the resources necessary to comply out of the market and therefore decrease fair market participation.
The full comment can be found here.
About the Consumer Relations Consortium
The Consumer Relations Consortium (CRC) is an organization comprised of more than 60 national companies representing the diverse ecosystem of debt collection including creditors, data/technology providers and compliance-oriented debt collectors that are larger market participants. Established in 2013, CRC is evolving the debt collection paradigm by engaging stakeholders—including consumer advocates, Federal and State regulators, academic and industry thought leaders, creditors and debt collectors—and challenging them to move beyond talking points and focus on fashioning real-world solutions that actually improve the consumer experience. CRC’s collaborative and candid approach is unique in the market. CRC is managed by The iA Institute.
About the Legal Advisory Board
The Legal Advisory Board (LAB) is an exclusive membership group of outside counsel with expertise in the accounts receivable industry who have each pledged their time and resources to support the mission of the CRC. The LAB is limited to ten law firms and is comprised of fourteen total attorneys. Throughout the year, the LAB serves as a legal resource to the CRC membership and assists in fulfilling the mission of promoting forward-thinking approaches to the issues raised by regulatory policy and technology innovation in the accounts receivable industry.