As many as 40 million Americans have errors on their credit reports—and errors on credit reports can cause havoc on someone’s financial well-being, leading them to have potentially higher interest rates on credit cards, mortgages, and car loans. It can even impact their ability to rent an apartment or get a job.
Meanwhile, despite the fact that the credit reporting industry’s entire reason for existing is to transmit accurate data, these millions of errors haven’t seemed to have hurt the industry. According to IBIS World, the credit rating industry made more than $14 billion in 2022, up from $9.1 billion just 12 years ago.
Realizing that data brokers are profiting from the sale of unauthorized and inaccurate data, Rohit Chopra, Director of the Consumer Finance Protection Board (CFPB), recently gave a speech addressing what can be done to protect Americans from data brokers’ harmful practices.
According to Chopra, the CFPB is developing new rules to limit data brokers’ misuse or abuse of data—particularly in light of the dangers that could arise from the rapid adoption of artificial intelligence.
While the CFPB considers other rules, Chopra highlighted two pending proposals.
The first would be that regulations could redefine data brokers as “consumer reporting agencies.”
This would more accurately reflect the type of consumer data these companies collect, such as consumers’ payment history, income, and criminal records. The change would also mean these entities would fall under credit reporting requirements. For example, the companies would then have to maintain accurate data and create effective dispute procedures to correct consumers’ information.
The second proposal would address “credit header data.” Currently, data brokers use personal identifier information from the major credit reporting companies, but this use isn’t considered to be a credit report. The CFPB is considering clarifying that this credit header data is a credit report because that change would limit the reporting companies’ ability to share sensitive data.
While this is important progress, creating regulations is a slow process. The CFPB isn’t planning on releasing draft regulations for public comment until 2024, and it’s unknown how long it would take to implement an adopted regulation.
That’s why, if you have had any issues with incorrect information on your credit report or other data broker issues, don’t wait for regulations to change before you defend yourself. Instead, contact an attorney as soon as possible. The Credit Report Law Group can help you correct your credit record and obtain compensation for any damages you have sustained.