Congress members: 1033 Rule could hinder innovation of fraud prevention tools

Federal Issues Congress Section 1033 Dodd-Frank CFPB

On July 31, a bipartisan group of Congress members sent a letter to CFPB Director Rohit Chopra raising concerns regarding the Bureau’s proposed 1033 Rule, which relates to consumer financial data privacy (covered by InfoBytes here). While the Congress members supported the overall goals of the proposed rule, including promoting data privacy and enabling consumers to control their own financial information, they expressed concerns that the inflexible restrictions on the secondary use of data may hinder innovation and fraud prevention efforts that could benefit consumers and small businesses. Specifically, they argued that the proposed limitations on data use beyond the consumer’s “requested product or service” could impact the development of fraud detection products and other new financial products and services, particularly those benefiting low-income consumers and improving access to credit. The letter urges the CFPB to consider allowing some secondary uses of data, provided consumer privacy is maintained through practices like data minimization and deidentification.