The consumer reporting industry is overseen primarily by two federal government entities which have oversight, supervisory, and compliance responsibilities (individual states also have regulatory requirements for consumer reporting which may need to be followed):
The Consumer Financial Protection Bureau (CFPB) has authority to make rules, to supervise or examine, and to bring law enforcement actions against certain financial institutions, including many types of consumer reporting agencies.
As a general matter, the CFPB has the ability to make rules under the “enumerated consumer laws”, such as the Equal Credit Opportunity Act (ECOA), Truth-in-Lending Act (TILA), Fair Credit Reporting Act (FCRA), and similar laws. The Bureau has additional authority to make rules with respect to the legal definition of covered persons and their service providers.
The CFPB also has the power to supervise or examine financial institutions, but it may only supervise certain, selected covered persons and their service providers. The Bureau has supervisory responsibility over banks, thrifts, and credit unions with assets over $10 billion, as well as their affiliates. In addition, it also oversees and supervises the larger entities in consumer reporting, consumer debt collection, nonbank mortgage originators and servicers, auto financing, payday lenders, and private student lenders and servicers of all sizes.
To be supervised by the CFPB means that the Bureau can periodically conduct examinations to assess compliance with the requirements of federal consumer financial law. The CFPB can also conduct examinations to obtain information about compliance systems or procedures, and to detect or assess risks to consumers and to consumer financial product markets.
The CFPB is focused on enforcing the Dodd-Frank Act of 2010 and its activities largely fall into three areas:
- Implementing directives from Congress;
- Addressing consumer issues where markets do not appear to be operating efficiently and fairly;
- Initiating projects to streamline, and clarify consumer financial regulation.
The Federal Trade Commission’s (FTC) stated goal is to protect consumers by stopping unfair or deceptive practices in the marketplace. It conducts investigations, sues companies and individuals that violate the law, and develops rules to ensure a fair marketplace. It works also with law enforcement partners across the country and around the world to protect consumers and foster competition.
The Commission also enforces a variety of specific consumer protection statutes, including the Equal Credit Opportunity Act (ECOA), Truth-in-Lending Act (TILA), Fair Credit Reporting Act (FCRA), and the Fair and Accurate Credit Transactions Act (FACT) that prohibit specifically-defined practices.