CFPB Issues Advisory Opinion Related to ID Matching Under FCRA

The Consumer Financial Protection Bureau yesterday issued an advisory opinion affirming its position that consumer reporting agencies using only the first name and last name of an individual to determine whether a particular piece of information relates to that individual — and not using other information, such as a date of birth, address, or Social Security number — “falls well below the statutory mandate” to assure the accuracy of information under the Fair Credit Reporting Act.

While the opinion is yet another move by the Bureau to move the ball forward on the commitment made by new Director Rohit Chopra to ensure fair markets and fair lending for everyone, it should also be read carefully by those in the accounts receivable management industry.

Relying on names alone, rather than taking the additional step of using a second identifier, “creates significant accuracy concerns because most names are shared with other consumers, and in some cases, thousands of other consumers,” the advisory opinion noted. “In preparing consumer reports, it is not a reasonable procedure to assure maximum possible accuracy to use insufficient identifiers to match information to the consumer who is the subject of the report. In particular, it has been the consistent view of the Bureau that name-only matching is not a procedure that assures maximum possible accuracy,” which constitutes a violation of the FCRA.

Along with publishing the opinion, the CFPB announced that it will be “closely collaborating” with the Federal Trade Commission on enforcement actions in this area, and Chopra noted that the FTC might be able to prosecute unfair or deceptive conduct that is outside the purview of the CFPB.

The Bureau also announced that, when prosecuting violations of the FCRA, it will “seek to redress the full range of harm to victims” including “restitution and damages” as well as civil money penalties.

“Today’s advisory opinion underscores the obligations and requirements of background screeners and other consumer reporting agencies to use reasonable procedures to assure maximum possible accuracy and prevent consumer harm,” Chopra said in a statement. “The legal interpretation defines conduct that is prohibited under the FCRA. In many cases, firms will need to employ significantly more rigorous procedures, including individualized reviews of files, to assure maximum possible accuracy.”

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