CFPB Goes After Data Brokers

The Consumer Financial Protection Bureau (CFPB) has begun an investigation into companies that track and collect consumer data.

The watchdog group said it “wants to understand the full scope and breadth of data brokers and their business practices, their impact on the daily lives of consumers, and whether they are all playing by the same rules,” per a Wednesday (March 15) news release.

In addition, the CFPB said the inquiry is a chance for people to offer feedback on an industry that plays “a significant role in people’s lives and in the economy,” but which nonetheless “largely operates out of public view.”

“Modern data surveillance practices have allowed companies to hover over our digital lives and monetize our most sensitive data,” CFPB Director Rohit Chopra said in the release. “Our inquiry will inform whether rules under the Fair Credit Reporting Act reflect these market realities.”

The effort comes weeks after the head of the House Financial Services Committee, Rep. Patrick McHenry, introduced the Data Privacy Act of 2023, designed to give consumers more control over their personal information.

“The financial services sector is already highly regulated when it comes to consumer data,” said McHenry, a Republican from North Carolina. “However, it’s critical that we bring our privacy guardrails into the 21st century to match the widespread adoption of financial technology.”

As reported here, the bill would let consumers know how their data is being collected and used, while also letting them stop the collection of that data.

Meanwhile, research by PYMNTS shows that consumers have a better understanding of the value of their personal data for banks, FinTechs, merchants and brands, not to mention scammers who are hard at work trying to steal it.

This storm of factors is accelerating the already great need for data security, as consumers increasingly choose commercial brands and finance firms based on their data security and use, according to “The Future of Authentication in Financial Services Playbook: Finding the Balance Between Security and Convenience,” a PYMNTS and Entersekt collaboration.

That study found that 52% of consumers say data security is important when sharing data, while 28% say it’s very important, 13% say it’s somewhat important, and 6% rate it as slightly important. Only 1% said data security is not at all important when sharing personal information.