July 13, 2018

BCFP is prioritizing supervision of credit bureaus

credit bureausThe Bureau of Consumer Financial Protection (BCFP) is prioritizing supervision over the credit reporting agencies, said a bureau representative during testimony Thursday before the Senate Banking Committee. NAFCU has stressed that the credit bureaus should be examined for data security compliance and held accountable when negligent.

Witnesses at Thursday's hearing, "An Overview of the Credit Bureaus and the Fair Credit Reporting Act," included Peggy Twohig, assistant director of supervision policy in the Division of Supervision, Enforcement and Fair Lending with the BCFP; and Maneesha Mithal, the assistant director of Division of Privacy and Identity Protection at the Federal Trade Commission's (FTC) Bureau of Consumer Protection.

During questioning from Senate Banking Committee Chairman Mike Crapo, R-Idaho, about the data breach at Equifax, Mithal responded that credit bureaus do hold the most sensitive information about consumers and it's on them to protect that information. She went on to say that the FTC could use more authority to pursue civil penalties in these data breaches where companies violated the laws.

Ahead of Thursday's hearing, NAFCU Executive Vice President of Government Affairs and General Counsel Carrie Hunt wrote committee leaders in support of "a strong, robust and secure credit bureau system." However, in the wake of the data breach at Equifax, Hunt stressed that the credit bureaus should be examined for data security compliance and held accountable when negligent.

Also during Thursday's hearing:

  • Sen. Tim Scott, R-S.C., talked about the Credit Access and Inclusion Act of 2018 (S. 3040), which he introduced last month. The legislation would amend the Fair Credit Reporting Act, allowing certain consumer credit information be reported to consumer reporting agencies in an effort to better the lives of those who are currently credit invisible. Twohig said the bureau is interested in alternative scoring models and added "if that information is accurate and predictive" it could be the solution to providing more credit.
  • In response to a question from Sen. Elizabeth Warren, D-Mass., Twohig stated that the bureau does not have authority under provisions in the Gramm-Leach-Bliley Act or the safeguards rule to issue new rules for large credit bureaus on how they must safeguard sensitive consumer information.