Credit Union Trades to CFPB: Abandon Personal Data Rulemaking
National trade groups say the proposed rule is beyond repair
The Consumer Financial Protection Bureau should abandon its proposed rule giving consumers easy and free access to their financial data and start the entire rulemaking process over again, the two national credit union trade groups told the bureau last week.
“The associations regard most aspects of the proposal as fatal to the development of any reasonable final rule and recommend the Bureau take additional time to conduct a more informed rulemaking process that prioritizes and incorporates the meaningful feedback provided by credit union data providers,” Madison Rose, senior director of advocacy and counsel at the Credit Union National Association and Andrew Morris, senior counsel for research and policy at the National Association of Federally-Insured Credit Unions, wrote in commenting on the proposal.
The CFPB issued its proposed rule in October. It is designed to make it easier for people to change financial services providers by allowing them easy access to account information. It would provide consumers with the power to share data about their use of digital wallets, credit cards, and checking and prepaid accounts. The rule would allow people to revoke access to their data and it would be implemented in phases, with larger financial services providers being subject to the rule sooner than smaller ones.
Comments on the proposed rule were due Dec. 29.
Rose and Morris said that the rule would have the unintended consequence of making credit union services less available and more expensive to those who need them the most. Large financial institutions would have a far easier time adapting to the rule than small credit unions, they said.
They added that the proposal goes far beyond the parameters set in the Dodd-Frank Act and said that it would force credit union data providers to subsidize third-party access to member data. Those concerns were raised during a preliminary review of the rule’s impact on small financial institutions, according to Rose and Morris.
“Instead, the CFPB appears to have had a pre-determined outcome from the outset of this rulemaking, which was further demonstrated by its refusal to extend the already short, less than 60-day comment period, which was held over multiple holidays,” they said.
Several House members praised parts of the rule, but suggested changes.
Most notably, House Financial Services Committee Chairman Rep. Patrick McHenry, R-N.C., a constant CFPB critic, said the rule would make “significant strides” in updating privacy regulations.
“For example, the proposed rule includes requirements that consumers be made aware of where their data is held and how it is used,” he wrote. “It would require that authorized third parties take certain steps to safeguard consumer data and ensure consumers are able to terminate the collection and use of their data in a more expedited fashion.”
McHenry added, however, that the rule, as drafted, would remove the consumer from the decision to allow data to be used for secondary purposes.
Rep. Joyce Beatty, D-Ohio, led a group of House Democrats in commending the rule, with one significant caveat. The rule, as written, would not provide data protection for millions of consumers who use EBT accounts to purchase food.
“Continuing to limit EBT account holders’ access to balance and transaction data in a more competitive marketplace will hinder these consumers’ ability to protect themselves from fraud and benefits theft, to plan for unexpected emergencies down the road, or to simply access or monitor their EBT account in a safe and secure manner,” the group of House Democrats wrote.
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