The White House recently touted new bipartisan legislation introduced in Congress aimed at cracking down on identity fraud through significant investments and policy changes. Crimes like identity theft have a real impact on consumers: Traditional identity fraud cost Americans a reported $23 billion in 2023. Channeling federal policies and resources toward reducing identity crime is a worthwhile and potentially effective effort that can help mitigate this harm.
The Consumer Financial Protection Bureau is preparing to announce new rules that could upend those efforts. Director Rohit Chopra has made clear his plans to impose new regulations on data brokers and restrictions on the sale of some types of data. Motivating this is a desire to rein in certain marketing practices, particularly when those practices allow bad actors to compromise consumer privacy using broker data. One such data source in the CFPB’s crosshairs is called credit header data, which is made available by the major credit reporting agencies and includes the basic identity information (name, date of birth, address, Social Security number) of credit-active Americans. Analytics relying on this and other data often underpins technology solutions used by companies, law enforcement and government agencies to detect and prevent identity fraud.
In other words, to meet the identity fraud reduction objectives championed by President Biden and Congress requires use of the exact data, by some of the same companies, that may be negatively impacted by the CFPB’s rules.
The responsible use of consumer data is something all policymakers should support. How and for what purposes consumer information is commoditized and sold is a reasonable question for federal regulators to ask. However, the answer to that question should not compromise uses of consumer data that not only uphold a safe and sound banking system, but also support the broader societal good of reducing identity crime.
Read more in American Banker