Student borrower advocacy group urges CFPB to supervise National Student Clearinghouse as CRA “larger participant”

Ballard Spahr LLP

Ballard Spahr LLP

The Student Borrower Protection Center has sent a letter to CFPB Director Kraninger urging her to designate the National Student Clearinghouse as a “consumer reporting agency,” supervise it as a “larger participant,” and add it to the CFPB’s public list of CRAs.  The letter is signed by Seth Frotman, who formerly served as the CFPB’s Student Loan Ombudsman and currently serves as the Center’s Executive Director.  

The Clearinghouse maintains a database that includes information about a student’s enrollment status and whether he or she has graduated that is used by lenders in making student loans.  In the letter, Mr. Frotman asserts that the Clearinghouse’s “core business function is consumer reporting, as defined in federal law.”  He also asserts that the Clearinghouse “has a history of bad business practices,” citing in support a CFPB report written while Mr. Frotman was at the Bureau.

The CFPB maintains a list of CRAs, which is available on the Bureau’s website and updated annually.  Mr. Frotman asserts that the Clearinghouse should be added to the list to “ensur[e] that consumers know they have the right to access reports about themselves, and to have faulty information fixed when errors occur.”

He also claims that the Clearinghouse’s annual revenues make it a “larger participant” for purposes of the CFPB’s rule “Defining Larger Participants of the Consumer Reporting Market” and, as a result, the Clearinghouse should be supervised for compliance by the Bureau.  In addition, Mr. Frotman states that the Clearinghouse’s activities “particularly where it sells student data to financial services firms for underwriting purposes, may also make the company a service provider to other supervised institutions.”

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.

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