The sale of Americans’ private data by “data brokers” to scammers, foreign adversaries, abusive domestic partners, and other malicious actors could face new regulations under a proposal announced by the Consumer Financial Protection Bureau (CFPB) on Tuesday. If adopted, these new rules would subject data brokers to oversight by the CFPB and hold them accountable under the same laws that regulate credit reporting agencies. The intent is to curtail a practice that officials argue poses significant threats to national security, public safety, and personal privacy.
CFPB Director Rohit Chopra expressed concern about the magnitude of the issue, noting that data brokers have been caught advertising the sale of personal information of senior national security officials. Chopra highlighted that the practice of selling consumers’ personal information for profit, without sufficient safeguards, could have far-reaching consequences. Scammers, foreign governments, and other dangerous actors can exploit this data, which may include highly sensitive information such as financial details, addresses, and even personal behaviors, leaving individuals vulnerable to theft, harassment, and violence.
The proposed rules would treat data brokers like credit bureaus. This means they would be required to ensure the accuracy of the personal data they collect and sell, protect against its misuse, and provide consumers access to their own information. The CFPB also emphasized the importance of establishing clear safeguards to prevent abuses like the unauthorized sale of personal information to entities that may use it for malicious purposes. Officials argue that the unrestricted trade of personal data, often for only a few pennies per person, has fueled activities such as espionage, identity theft, and violence targeting law enforcement officers and other public figures.
The new rules also reflect broader concerns raised by the Biden administration about the use of personal data in the digital age. In 2022, the Federal Trade Commission (FTC) filed a lawsuit against an Idaho-based company over its sale of geolocation data, which could be traced to locations such as abortion clinics, addiction treatment centers, and churches. The case highlighted the risks associated with the sale of location data, which could be used to track individuals’ movements and expose them to dangerous situations.
One of the most chilling examples of how personal data can be misused is the 2020 murder of a federal judge’s son. Authorities traced the crime back to a man who had purchased the judge’s home address from a data broker, underscoring the dangers of this unregulated industry. This case and others like it have prompted lawmakers and consumer protection agencies to push for stronger oversight and regulation.
The proposed regulations would apply to companies that collect and sell sensitive consumer data, such as income levels, credit scores, and net worth. By bringing these data brokers under the umbrella of credit reporting laws, the CFPB aims to impose stricter rules on their practices and protect consumers from exploitation. The new regulations would also mandate greater transparency and accountability, allowing individuals to access their personal data and make corrections when necessary, just as they can with their credit reports.
Despite the potential political shift that may come with the change in U.S. presidential administrations, the CFPB has decided to move forward with these rulemaking efforts. While President-elect Donald Trump has pledged significant cuts to regulations and spending, the CFPB is hopeful that bipartisan support for data privacy and security will ensure that some protections will remain in place. The proposal is expected to face public comment until March 2025, allowing stakeholders, including businesses, privacy advocates, and consumers, to provide feedback on the proposed rules.
As the debate over data privacy continues to intensify, this proposal marks an important step in addressing the growing concerns surrounding the misuse of personal data. With the increasing reliance on digital platforms, the sale of personal information has become an industry worth billions of dollars. However, without proper regulation, it also exposes individuals to considerable risks, including fraud, harassment, and even physical harm. The CFPB’s proposed rules are part of a larger effort to hold data brokers accountable and ensure that consumers are better protected in an increasingly data-driven world.
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