Recent reports about computer hacks of government databases, notably those run by the Internal Revenue Service and the federal Office of Personnel Management, are raising new concerns about the Consumer Financial Protection Bureau and the security of consumer financial information the agency collects to inform its policy making.
The CFPB was created as an independent federal consumer watchdog under the 2010 Dodd-Frank Act. That legislation gave the CFPB sweeping powers to collect all types of transaction-level information from financial institutions and their processing partners in support of its consumer protection activities.
At least one processor has already complained about the resulting workload, and has said it may pass along the costs to bank clients, according to the American Bankers Association. In a June 2, 2015, memorandum to state banking associations, the Washington, D.C.-based trade group urged its state affiliates to work with it to rein in the CFPB's financial data collection efforts
Soon after, Republican lawmakers delivered a stern rebuke to CFPB Director Richard Cordray concerning the agency's data collection efforts. "We are gravely concerned by the CFPB's inability to confirm that the massive amount of data it collects and stores could not be reverse-engineered and traced back to one of our constituents," a group of 23 U.S. Senators wrote in a letter to Cordray. "Our constituents have an absolute right to the security of their personal information, whether contained in a tax return at the IRS, personnel records at OPM, or in the bulk data that the CFPB is collecting on an ongoing basis."
Those signing the letter included several members of the Senate Banking Committee, which has oversight authority for the CFPB.
Results of a consumer poll released June 18 were equally critical of the CFPB. A majority of U.S. adults contacted by the polling firm Zogby Analytics said the agency's data collection efforts were as worrisome as the National Security Agency's controversial monitoring program.
That survey, commissioned by the U.S. Consumer Coalition, also revealed significant consumer opposition to CFPB proposals to rein in nonbank financial services companies, such as prepaid card and payday loan companies. The USCC describes itself as "a grassroots consumer advocacy organization." Its website lists two initiatives: consumer protection regulations and saving the alternative taxi service Uber.
"We have a powerful agency unilaterally regulating products and industries while subjecting Americans to an unprecedented invasion of their personal financial data, and it's clear Americans don't like it," said Brian Wise, Senior Advisor at the USCC. "They clearly oppose the agency's activities to invade their privacy, track their purchases, and efforts to tell them what products they can and cannot use."
The CFPB, controversial from its inception, has come under increased criticism with its release of proposed new rules that would come down hard on payday lenders and extend many of the consumer protections for credit and debit cards to prepaid cards. (See "Congressman blasts CFPB's prepaid card plan" under Breaking Industry News, www.greensheet.com/breakingnews.php?flag=breaking_news&id=1563, for more on the CFPB's controversial prepaid card rules.)
The Zogby-USCC survey, conducted June 5 to 10, 2015, queried 3,604 adult Americans about the agency. Here are some specific findings:
Wise said the survey – the first ever poll-taking to focus on consumer attitudes toward the CFPB ‒ validates concerns raised by his group and other detractors of the CFPB. "Americans have spoken loudly for the first time in this survey that they believe this agency is invading their privacy and restricting their freedom of choice in a way that makes them very uncomfortable," he said.
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