At a field hearing on credit reporting in Detroit, Michigan, Director Richard Cordray announced that the CFPB had adopted a final rule defining “larger participants” for consumer reporting agencies. Under Section 1074 of the Dodd-Frank Act, the CFPB has authority to supervise nonbank “larger participant[s] in markets for other consumer financial products or services.” In his prepared remarks, Mr. Cordray noted that the credit reporting industry “exerts a tremendous and growing influence over the ways and means of [consumers’] financial lives.” As a result of this influence, Mr. Cordray announced that the CFPB will gather data to determine how it can “best act to protect consumers” by focusing on: (1) recordkeeping and reporting practices of lenders, and quality and reliability testing and screening of information provided to credit reporting companies; (2) accuracy of assembly and maintenance of the information contained in the consumer credit reports; and (3) consumers’ experiences in disputing errors contained in their credit reports.
Under the final rule, which closely mirrors the February 2012 proposed rule defining “larger participants” of the consumer reporting and debt collection markets (see February 21, 2012 Alert), the CFPB will have supervisory authority over consumer reporting agencies with more than $7 million in annual receipts. Under this definition, the CFPB’s supervision authority will reach 30 firms which account for 7% of market participants and 94% of industry receipts. More information about the rule and its requirements can be found on the fact sheet.
The CFPB also released a consumer advisory on the consumer reporting industry, a list of credit reporting agencies, and answers regarding consumer reporting companies on the Ask CFPB database. The rule becomes effective September 30, 2012. The CFPB plans to release a rule defining “larger participants” for debt collection agencies soon.