Data Brokerage Under Scrutiny, CFPB’s Regulations

  • By Farrukh Mushtaq

    Farrukh Mushtaq

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    Farrukh Mushtaq, a digital marketer at PureSquare, possesses a keen interest in cybersecurity and enjoys writing about it. With several years of experience in the digital marketing industry, he brings expertise and passion to his work.

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  • 19 April 2024
  • 4 mins read

Table of Content

Table of Contents

The Consumer Financial Protection Bureau (CFPB) is devoted to introducing new regulations targeting data brokers, aligning with directives outlined in an executive order from President Joe Biden.

The proposed rules aim to enforce Fair Credit Reporting Act (FCRA) compliance among data brokers, with a significant shift in oversight within the consumer data ecosystem.

Defining Data Brokers as Consumer Reporting Agencies

CFPB Director Rohit Chopra wants the agency's intent to act as "consumer reporting agencies," subjecting them to FCRA mandates. 

This move seeks to restrict the spread of specific consumer data, such as credit reports, to authorized entities for predefined purposes, such as employment verification or credit assessment.

National Security Implications

Chopra also highlighted the national security dimension of data brokerage activities, emphasizing the risk posed by foreign actors acquiring sensitive personal data. 

He cited breaches like the Anthem, Equifax, and Marriott incidents, framing them as instances where adversaries unlawfully obtained American citizens' data.

This perspective positions data privacy as integral to protecting national security interests.

Legislative Response and Rising Concerns

The discussion extends to legislative efforts, the proposed Protecting Americans’ Data from Foreign Adversaries Act. 

This legislation seeks to restrict data brokers' ability to sell personally identifiable information to entities associated with foreign adversaries. 

By imposing penalties for non-compliance, the bill also highlights the government's commitment to protecting sensitive data from exploitation by hostile entities.

Risks and Implications

The presence of unregulated data brokerage extends beyond privacy concerns to encompass broader risks of exploitation and surveillance. 

Chopra highlighted scenarios where detailed personal information could be weaponized, enabling targeted surveillance or coercion by foreign intelligence agencies. 

This highlights the urgency of regulatory intervention to mitigate risks associated with unregulated data trading practices.

Government Reliance on Data Brokers

While the government seeks to regulate data brokers, it also relies on their services for various surveillance and monitoring purposes. The need for balanced regulation that addresses both security imperatives and individual privacy rights.

The Day Ends Well for Privacy 

The proposed regulations represent a major step towards addressing the challenges put up by unregulated data brokerage. 

With regulatory frameworks going together with national security priorities, policymakers aim to strike a balance between innovation, individual privacy, and security.