The Consumer Financial Protection Bureau recently offered its assessment regarding a potential information path auto finance company collectors and recovery professionals might use during the skip-tracing process to mitigate delinquencies and potential charge-offs.
The CFPB outlined seven principles for when consumers authorize third-party companies to access their financial data to provide certain financial products and services. Bureau officials insisted these principles are intended to help foster the development of innovative financial products and services, increase competition in financial markets and empower consumers to take greater control of their financial lives.
The principles discussed by the bureau included:
—Data scope and usability
—Control and informed consent
—Ability to dispute and resolve unauthorized access
—Efficient and effective accountability mechanisms
The CFPB acknowledged many companies, including “fintech” firms, banks and other financial institutions, get authorization from consumers to access their account data that reside in separate organizations to provide a variety of products and services. These include fraud screening and identity verification, personal financial management, and bill payment.
Bureau officials concede such products and services could help consumers make smarter spending, savings and investment decisions and live their lives more efficiently and effectively. The bureau said it has been studying consumer-authorized data access and issued a Request for Information in 2016 to gather feedback from wide range of stakeholders.
The CFPB noted that it received feedback from large and small banks and credit unions, their trade associations, aggregators, “fintech” firms, consumer advocates and individual consumers.
“The Consumer Bureau recognizes that while consumer-authorized data sharing promises great benefits to consumers, there are many consumer protection challenges to be considered as these technologies continue to develop,” officials said. “The Consumer Bureau advocates strongly for consumer control of the consumer’s data and transparency.
“At the same time, the Consumer Bureau emphasizes the importance of data security and privacy. Based on the Consumer Bureau’s 2016 Request for Information, as well as other stakeholder outreach, the Consumer Bureau understands that some key industry stakeholders are working on improvements to consumer-authorized data access. These improvements relate to the agreements, systems and standards involved in consumer-authorized data access,” they continued.
The CFPB insisted that it will continue to closely monitor developments in this market and will also continue to assess how these principles may best be realized.
The bureau pointed out these principles do not establish binding requirements or obligations relevant to the agency’s exercise of its rulemaking, supervisory or enforcement authority. In addition, officials added that they are not intended to alter, interpret or otherwise provide guidance on existing statutes and regulations that apply in this market.
Lastly, although the bureau emphasized that it stands ready to facilitate constructive efforts or to take other appropriate action to protect consumers, the principles are not intended as a statement of the bureau’s future enforcement or supervisory priorities.
“These principles express our vision for realizing an innovative market that gives consumers protection and value,” CFPB director Richard Cordray said.