WASHINGTON–TheCFPB has issued an interpretive rule it said affirms states’ abilities to protect their residents through their own fair credit reporting laws.
With limited preemption exceptions, states have the flexibility to preserve fair and competitive credit reporting markets by enacting state-level laws that are stricter than the federal Fair Credit Reporting Act (FCRA), according to the Bureau.
“Given the intrusive surveillance that Americans face every day, it is critical that states can protect their citizens from abuse and misuse of data,” said CFPB Director Rohit Chopra in a statement. “The legal interpretation issued today makes clear that federal law does not automatically hit delete on state data protections.”
What FCRA Does
Enacted in 1970, the CFPB noted the Fair Credit Reporting Act, among other things, defines the permissible uses of, and establishes guidelines for information included in, credit reports. It also creates a process for people to dispute information in their credit files.
“The federal statute leaves states with the flexibility to consider and enact laws that reflect challenges and risks affecting their local economies and residents,” according to the Bureau. “For example, tenant screening reports may contain questionable or incorrect information that impedes renters’ access to housing. States are able to enact protections against abuse and misuse of data to mitigate these consequences.”
Making it ‘Clear’
According to the CFPB, the interpretive rule “makes clear”:
- States retain broad authority to protect people from harm due to credit reporting issues: “For example, a state could forbid a credit reporting company from including information about a person’s medical debt for a certain period of time after the debt was incurred.”
- State laws are not preempted unless they conflict with the Fair Credit Reporting Act or fall within narrow preemption categories enumerated within the statute. “Preemption under the Fair Credit Reporting Act is narrow and targeted. Nothing in the statute generally preempts state laws relating to the content or information contained in credit It does not preempt, for instance, state laws governing whether eviction information or rental arrears appears in the content of credit reports.”
The CFPB said the issuance of the rule arises from the Office of the New Jersey Attorney General notifying the CFPB of pending litigation that included an allegation the FCRA preempted a New Jersey consumer protection statute.
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