The new legislation will restrict the exploitation of personal data in background screenings and credit reports
The Consumer Financial Protection Bureau (CFPB) introduced new regulations on cyber security and data privacy under the Fair Credit Reporting Act. The Act dictates how companies collect and report consumer data for credit, insurance, housing, and employment.
Under the new rules, additional layers of security will protect consumers and permit companies to collect data only when it’s crucial for their services. The advisory also reminds covered entities of potential criminal liability for misconduct.
In particular, the watchdog plans to hold companies accountable for illegal debt collection and false identification of consumers in background reports. Violators can face criminal penalties and imprisonment.
- The Act will enhance matching procedures and define permissible report purposes;
- It will be unlawful to provide credit reports of multiple people as “possible matches”;
- Disclaimers about insufficient matching policies would not legitimise violations;
- Covered entities mustn’t supply background reports to unauthorised individuals.
Thus, the law will also restrain big tech frivolous use of private data and safeguard compliance with Congress regulations.