The Consumer Financial Protection Bureau (CFPB) issued a rule affirming the ability of states to establish their own fair credit reporting laws.
This allows states to enact state-level laws that are stricter than the federal Fair Credit Reporting Act (FCRA), reflecting the challenges and risks affecting their local economies and residents. For example, tenant screening reports may contain questionable or incorrect information that impedes renters’ access to housing. States can enact protections against abuse to mitigate these consequences.
“Given the intrusive surveillance that Americans face every day, it is critical that states can protect their citizens from abuse and misuse of data,” CFPB Director Rohit Chopra said. “The legal interpretation issued today makes clear that federal law does not automatically hit delete on state data protections.”
Congress made clear when the Fair Credit Reporting Act was enacted in 1970 that it preempts only narrow categories of state laws. This new rule affirms that, saying states have broad authority to protect people from harm due to credit reporting issues. It adds that state laws are not preempted unless they conflict with the Fair Credit Reporting Act or fall within narrow preemption categories. As federal regulators learned from the 2007-2008 mortgage crisis, federal preemption of state laws can stop state regulators from identifying dangerous patterns and mitigating market risks.
The issuance of this rule arises from the Office of the New Jersey Attorney General notifying the CFPB of pending litigation that included an allegation the FCRA preempted a New Jersey consumer protection statute.