CFPB Clarifies State Authority to Issue and Enforce Fair Credit Reporting Laws

The CFPB issued an interpretive rule clarifying state authority to protect residents through the issuance and enforcement of fair credit reporting laws.

Under the new interpretation, the CFPB clarifies that states have the authority to enact state-level laws that could potentially be stricter than the provisions set forth in the Fair Credit Reporting Act ("FCRA"). The CFPB stated that the law provides the states with the flexibility to preserve the fairness and competitiveness of credit reporting markets as they see fit. The interpretive rule is intended to allow states to enact laws that reflect risks to local economies and their residents to best tailor the laws to the communities they serve. The rule affirms that (i) states have wide-ranging authority to protect their residents from harm resulting from credit reporting issues and (ii) state laws are not preempted unless they directly conflict with the FCRA or fall within the narrow preemption categories.

The new rule follows a previously issued interpretive rule that clarified the scope of state enforcement authority under provisions of the Consumer Financial Protection Act ("CFPA") and affirmed that states have the authority to (i) enforce the CFPA, (ii) pursue claims and actions against a wide range of entities and (iii) bring concurrent enforcement actions against entities. (See previous coverage.)