The Consumer Financial Protection Bureau is designed as a hedge against abusive business practices, but its bulk information collection is under fire.
The Consumer Financial Protection Bureau is collecting sensitive financial data on millions of Americans but lacks a plan to adequately protect it, according to a new report from the Government Accountability Office.
In a report released Monday, the GAO found the consumer watchdog agency has access to credit-card information for nearly 600 million accounts, and has collected data on student loans and mortgages as well. But the CFPB lacks a consistent plan to keep that sensitive information safe, the report said.
The CFPB had only collected information for 25 to 75 million of those credit-card accounts, the rest of the access comes from data-sharing agreements with another financial agency. Also, it only collected data with personal identifiers, such as a name or address, in very limited circumstances and much of the data was collected in a onetime occurrence, according to the report.
"The GAO's report recognizes that the Bureau collects data on a scale similar to other regulators and uses that data to carry out its mission to protect consumers," a CFPB spokesman said in a statement Monday. "The CFPB agrees with the GAO's recommendations, which focus primarily on documentation of processes related to data collection."
The oversight office's main privacy concern is that the CFPB does not have written data-collection and security procedures, which could result in "inconsistent" application of privacy policies. The report also noted that other institutions, including the Federal Reserve and the Comptroller of the Currency, collect similar data on a comparable scale.
CFPB Director Richard Cordray said in a response letter that the agency agrees with GAO's recommendations and is currently in the process of developing those guidelines.
"As GAO notes in its report, access to such data allows the Bureau to 'better detect risks in consumer financial markets and improve federal oversight of consumer financial … laws,'" Cordray wrote in the response letter.
Sen. Mike Crapo of Idaho, the top Republican on the Senate banking panel, requested the study after becoming concerned about the scope of the agency's data collection.
"At a time when data and identity-related crimes are at an all-time high, the last thing the American people need is one more federal agency collecting their private financial information," Crapo said in a statement Monday.
The CFPB was created by the 2011 Dodd-Frank Wall Street law, and was aimed at protecting consumers from predatory lending and other financial malpractice. The impetus for the agency was the loose home-mortgage lending that contributed to the pre-financial collapse housing bubble.
But the agency has been controversial since its inception, with Republicans charging that it lacks congressional oversight and has created excessive regulatory burdens for lenders and borrowers. CFPB backers, meanwhile, point to the agency's record of investigating and punishing predatory practices.
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