New federal rule allows states to take on abusive credit reporting practices
The consumer advocates at the National Consumer Law Center (NCLC) are cheering a new rule issued by the Consumer Financial Protection Bureau (CFPB) that will allow states to take action to protect citizens from abusive practices by credit reporting agencies (Experian, Equifax, TransUnion).
The rule allows state consumer protection agencies and attorneys general to take action to limit data collection by credit bureaus and to move affirmatively to resolve consumer complaints against credit bureaus.
In a statement, NCLC says the measure will result in expanded protections for consumers who rely on credit reporting agencies to access loans, lines of credit, mortgages, rent, and more.
“This interpretive rule will allow states to better protect their consumers, workers, and tenants from the abuses and flaws of companies that traffic in and profit from our data,” said Chi Chi Wu, National Consumer Law Center staff attorney, “As the laboratories of democracy, states are often faster and better positioned to safeguard their residents against emerging problems than the federal government. Enabling states to step in and step up is necessary when problems start locally or are unaddressed by the void left by a divided Congress.”
NCLC also noted that the rule will expand protections for renters - especially critical in a tight housing market.
“It’s up to the states now to pass laws to ensure that people aren’t unfairly locked out of housing because of tenant screening reports that aren’t reliably predictive of someone’s ability to be a successful tenant,” said Ariel Nelson, NCLC staff attorney. “States should prohibit including questionable eviction records in tenant screening reports, such as evictions that did not result in a judgment against the tenant. States should also prohibit the reporting of rental arrears by debt collectors, or impose significant requirements before such debts can be reported.”