CFPB issues interpretive rule on FCRA preemption

Ballard Spahr LLP
Contact

Ballard Spahr LLP

The CFPB has issued an interpretive rule on the scope of the Fair Credit Reporting Act’s preemption provisions.  The rule’s narrow reading of those provisions appears intended to encourage and support state legislative efforts to enact laws targeting credit reporting issues of concern to the CFPB, such as the reporting of medical debt.

The FCRA’s preemption provisions are set forth in 15 U.S.C. 1681t.  Section 1681t(a) sets forth the principle that only state laws that are “inconsistent” with the FCRA are preempted “and then only to the extent of the inconsistency.”  Section1681t(b) expressly preempts various categories of state law.  The interpretive rule focuses on sections 1681t(b)(1) and 1681t(b)(5).  According to the CFPB, the plain text of these sections makes it “apparent that both provisions have a narrow and targeted scope.”

Section 1681t(b)(1). This provision contains eleven subsections each of which preempts state law “with respect to any subject matter regulated under” an enumerated FCRA section.  The enumerated section is followed by a parenthetical phrase beginning with “relating to” that describes the enumerated section.  For example, section 1681t(b)(1)(E) generally preempts state law “with respect to any subject matter regulated under section 1681c of this title, relating to information contained in consumer reports.”  According to the CFPB, for a state law to be preempted by section 1681t(b)(1)(E), it must both concern the subject matter regulated by section 1681c and relate to the specific topics regarding consumer report information addressed by section 1681c (such as obsolescence and information that must be included).  Thus, in the CFPB’s view, section 1681t(b)(1)(E) does not preempt state laws “about subject matter regarding the content of or information on consumer reports beyond these examples.” 

As an example of what follows from its reading of section 1681t(b)(1)(E ), the CFPB states that although “how long” categories of information can continue to appear on a consumer report is a subject matter regulated by section 1681c, “what or when items generally may be initially included on a consumer report is not a subject matter regulated under section 1681c.” (emphasis included).  Accordingly, the CFPB concludes that state laws “relating to what or when items generally may be initially included  on a consumer report—or what or when certain types of information may initially be included on a consumer report—would generally not be preempted by section 1681t()(1)(E).” 

The CFPB advises that its reading of section 1681t(b)(1)(E ) means that states “retain substantial flexibility to pass laws involving consumer reporting to reflect emerging problems affecting their local economies and citizens.”  Citing various concerns about medical debt that it has previously raised, the CFPB states that “to address these concerns and others, States may pass laws addressing the furnishing and reporting of medical debt.”  It then indicates that a state law “forbid[ding] a consumer reporting agency from including medical debt in a consumer report for a certain period of time after a debt was incurred…would generally not be preempted.”

The CFPB also indicates that a state law that “prohibited a furnisher from furnishing information about medical debt for a certain period of time after the debt was incurred, such a law would not be preempted by section 1681t(b)(1)(F).”  Section 1681t(b)(1)(F) preempts state laws “with respect to any subject matter regulated under section 1681s-2 of this title, relating to the responsibilities of persons who furnish information to consumer reporting agencies.”  The CFPB observes that while section 1681s-2 sets forth requirements for furnishers to assure the accuracy of information provided to consumer reporting agencies, it “says nothing about when a furnisher may or must begin furnishing information about a consumer’s account.”

Another area for possible state regulation identified by the CFPB is the reporting of rental information (e.g. rent-related charges and fees, eviction records) and criminal and civil information.  Once again citing concerns it has previously raised about such information, the CFPB states that “to address these concerns and others, States may pass laws addressing the furnishing and reporting of rental information.”  It indicates that a state law “prohibiting a consumer reporting agency from including information (or certain types of information) about a consumer’s eviction, rental arrears, or arrests on a consumer report would generally not be preempted under section 1861t(b)(1).”  According to the CFPB, although section 1861c regulates how long information such as civil suits, judgments, and arrest records can appear on a consumer report, “nothing in section 1681c regulates the content of eviction information, rental arrears, or arrest records, or when such information may initially appear on a consumer report.”

Section 1681t(b)(5).  This provision preempts state law “with respect to the conduct required by the specific provisions of [nine enumerated parts of the FCRA].  For example, section 1681t(b)(5)(E) preempts state law “with respect to the conduct required by the specific provisions of section 1681j(a),” which is the FCRA provision that sets forth the requirement for consumer reporting agencies to provide free annual credit reports.  The CFPB indicates that this provision only preempts state laws concerning the annual disclosure.  Thus, according to the CFPB, since section 1681j(a) contains no requirements regarding the language in which disclosures are provided, a state law that “required a consumer reporting agency [to] provide information required by the FCRA at the consumer’s requests in language other than English…would generally not be preempted by section 1681t(b)(5)(E).”

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ballard Spahr LLP | Attorney Advertising

Written by:

Ballard Spahr LLP
Contact
more
less

Ballard Spahr LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.