Consumer Bureau Takes Action to Protect Personal Data

CFPB takes steps to prevent financial institutions from profiting from personal financial data of customers

The Consumer Financial Protection Bureau (CFPB) has announced new efforts to protect personal data collected by financial institutions.

Under new rules being considered by the CFPB, consumers would be able to more easily walk away from institutions - and protect their personal data in the process. The rules are designed to give the consumer, rather than the institution, control over sensitive personal information.

“Dominant firms shouldn’t be able to hoard our personal data and appropriate the value to themselves,” said CFPB Director Rohit Chopra. “The CFPB’s personal financial data rights rulemaking has the potential to jumpstart competition, giving Americans new options for financial products.”

According to the CFPB, dominant financial institutions possess tremendous power in the current marketplace. These companies compile vast troves of personal data, including information about people’s use of financial products and services. By monopolizing the use of personal financial data, financial institutions are able to block competitors’ access to potential customers and stifle development of competitors’ products and services. In addition, data protection concerns have contributed to a lack of trust among market participants, and a growing sense of powerlessness among the general public. Clear data rights for consumers have the potential to give individuals more bargaining leverage.

If the CFPB's current proposal is finalized, the rule would require firms to make a consumer’s financial information available to them or to a third party at that consumer's direction. As described in the outline, the CFPB is considering proposals, for instance, that would empower consumers who want to switch providers to transfer their account history to a new company, so they do not have to start over if they are unsatisfied with the service provided by an incumbent firm.

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