Hearing the news “the CFPB is coming” as a credit agency or financial services professional is something akin to hearing the news “winter is coming” as a Game of Thrones character — it means nothing good is about to happen to you, and more likely than not, you are in a lot of trouble.
Such is the situation Equifax and the other credit reporting agencies now face, since the credit agency hack has officially aroused the ire of the CFPB. In fairness, after accidentally losing the personal financial information of the entire adult population of the United States, Equifax probably already knew it was in a lot of trouble and that nothing good is about to happen to it.
But for the teams at TransUnion and Experian, the news of the CFPB’s new interest in tightly monitoring them? Like we said — winter is coming.
Consumer Financial Protection Bureau Director Richard Cordray has officially announced that in the wake of the Equifax hack, all three credit regulation agencies are going to have to get used to “a new regime.”
“The old days of just doing what they want and being subject to lawsuits now and then are over,” Cordray said.
Equifax, TransUnion and Experian are all getting embedded regulators to ensure that similar breaches of private information don’t happen again.
The credit regulation firms “should welcome” the heightened level of scrutiny, Cordray told CNBC.
“If they’re going to restore public confidence in this marketplace, and if they’re going to create the kind of reforms necessary…There has to be a scheme of preventive monitoring in place,” he said. “They’re going to have to accept that, they’re going to welcome that, they’re going to have to be very forthcoming.”
Cordray further noted that what happened at Equifax was “far beyond” what had happened in the big retail hacks like the ones at Target and Home Depot — and, as such, demanded big changes.
“We’re going to have monitoring in place that’s preventive. It’s going to be a different regime than we’re used to,” he said. “In the past they dealt with these problems on their own. They did the best they could. … That’s not good enough.”
Federal laws give the CFPB the power to supervise and examine large credit reporting firms. In January, the CFPB fined TransUnion and Equifax $5.5 million in total for deceiving customers about the usefulness and cost of their credit scores.