A significant decision has been made by a senior official in the Trump administration to retract a proposed regulation aimed at curbing the practices of data brokers selling personal and financial information of Americans, including sensitive details such as Social Security numbers.
In December 2024, the Consumer Financial Protection Bureau (CFPB) announced intentions to close a loophole in the Fair Credit Reporting Act, which currently safeguards Americans’ data gathered by consumer reporting agencies such as credit bureaus and rental screening services. The planned regulation would have treated data brokers similarly to other companies under this federal law, mandating compliance with associated privacy rules.
However, the rule was officially withdrawn early on Tuesday, as detailed in the Federal Register. CFPB’s acting director, Russell Vought, who also oversees the White House’s Office of Management and Budget, indicated that the rule did not align with the Bureau’s present interpretation of the Fair Credit Reporting Act. This change was first reported by Wired.
Data brokers form a lucrative sector, profiting by collecting and selling extensive troves of personal and financial information about Americans. The data is often sold without individuals’ explicit consent, finding its way to various companies and law enforcement agencies. With such extensive collection practices come notable risks; in the past year, breaches at two data brokers resulted in the exposure of millions of Social Security numbers and significant location data.
2024 has been a notable year for regulatory action, as the Federal Trade Commission banned multiple data brokers from collecting and distributing individual data without appropriate permissions, following allegations of illegal tracking practices. Privacy advocates have pressed for the government to apply the Fair Credit Reporting Act more rigorously to rein in the actions of data brokers.
The CFPB’s decision to withdraw the proposed regulation arrives shortly after the Financial Technology Association, a lobbying group representing banking and fintech sectors, advised Vought, requesting cancellation of the CFPB’s rule. They argued that enforcing such a regulation could adversely impact financial institutions’ capacities to detect and prevent fraudulent activities.
As of now, the CFPB has not provided any comments regarding the withdrawal of the rule. The situation raises ongoing concerns around privacy, data security, and the implications of the current regulatory environment on the protection of personal information in an increasingly digitised world.
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