Rule2022-14150
The Fair Credit Reporting Act's Limited Preemption of State Laws
Primary source
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Published
July 11, 2022
Effective
July 11, 2022
Issuing agencies
Consumer Financial Protection Bureau
Abstract
States play an important role in the regulation of consumer reporting. State laws that are not "inconsistent" with the Fair Credit Reporting Act (FCRA) are generally not preempted by that statute. The FCRA also expressly preempts certain categories of State laws. This interpretive rule clarifies that FCRA's express preemption provisions have a narrow and targeted scope. States therefore retain substantial flexibility to pass laws involving consumer reporting to reflect emerging problems affecting their local economies and citizens. For example, if a State law were to forbid consumer reporting agencies from including information about medical debt, evictions, arrest records, or rental arrears in a consumer report (or from including such information for a certain period of time), such a law would generally not be preempted. Likewise, if a State law were to prohibit furnishers from furnishing such information to consumer reporting agencies, such a law would also not generally be preempted. Similarly, if a State law required that a consumer reporting agency provide information required by the FCRA at the consumer's requests in languages other than English, such a law would generally not be preempted.
Full Text
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<title>Federal Register, Volume 87 Issue 131 (Monday, July 11, 2022)</title>
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[Federal Register Volume 87, Number 131 (Monday, July 11, 2022)]
[Rules and Regulations]
[Pages 41042-41046]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-14150]
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BUREAU OF CONSUMER FINANCIAL PROTECTION
12 CFR Part 1022
The Fair Credit Reporting Act's Limited Preemption of State Laws
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Interpretive rule.
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SUMMARY: States play an important role in the regulation of consumer
reporting. State laws that are not ``inconsistent'' with the Fair
Credit Reporting Act (FCRA) are generally not preempted by that
statute. The FCRA also expressly preempts certain categories of State
laws. This interpretive rule clarifies that FCRA's express preemption
provisions have a narrow and targeted scope. States therefore retain
substantial flexibility to pass laws involving consumer reporting to
reflect emerging problems affecting their local economies and citizens.
For example, if a State law were to forbid consumer reporting agencies
from including information about medical debt, evictions, arrest
records, or rental arrears in a consumer report (or from including such
information for a certain period of time), such a law would generally
not be preempted. Likewise, if a State law were to prohibit furnishers
from furnishing such information to consumer reporting agencies, such a
law would also not generally be preempted. Similarly, if a State law
required that a consumer reporting agency provide information required
by the FCRA at the consumer's requests in languages other than English,
such a law would generally not be preempted.
DATES: This interpretive rule is effective on July 11, 2022.
FOR FURTHER INFORMATION CONTACT: Shiva Nagaraj, Senior Counsel, Legal
Division, and Bradley Lipton, Senior Counsel, Legal Division, (202)
435-7700. If you require this document in an alternative electronic
format, please contact <a href="/cdn-cgi/l/email-protection#1c5f5a4c5e435d7f7f796f6f757e75707568655c7f7a6c7e327b736a"><span class="__cf_email__" data-cfemail="3675706674697755555345455f545f5a5f424f765550465418515940">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Background
The Fair Credit Reporting Act (FCRA)--which was enacted in 1970 and
has since been amended several times--was intended by Congress to
``ensure fair and accurate credit reporting, promote efficiency in the
banking system, and protect consumer privacy.'' Safeco Ins. Co. of Am.
v. Burr, 551 U.S. 47, 52 (2007). The FCRA ``imposes a host of
requirements concerning the creation and use of consumer reports.''
Spokeo, Inc. v. Robins, 578 U.S. 330, 335 (2016). Among other things,
the statute sets forth the permissible uses of consumer reports,
establishes limits for information included in consumer reports, and
creates a process for consumers to dispute information in their credit
files.
In the Consumer Financial Protection Act of 2010, Congress granted
the Consumer Financial Protection Bureau general rulemaking authority
over the FCRA (except for certain provisions that are administered by
other Federal agencies).\1\ The Bureau also has authority to enforce
the FCRA, along with other Federal regulators.\2\
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\1\ The Bureau is generally authorized to issue regulations as
``necessary or appropriate to administer and carry out the purposes
and objectives of [the FCRA], and to prevent evasions thereof or to
facilitate compliance therewith.'' 15 U.S.C. 1681s(e)(1). The CFPA
did not, however, transfer to the Bureau rulemaking authority for 15
U.S.C. 1681m(e) (``Red Flag Guidelines and Regulations Required''')
and 15 U.S.C. 1681w (`''Disposal of Records'').
\2\ 15 U.S.C. 1681s(b).
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States also play an important role in the regulation of consumer
reporting. The FCRA itself grants States the authority to enforce the
statute.\3\ Additionally, in the wake of Congress's enactment of the
FCRA, many States passed their own versions of the statute. States have
continued to enact legislation regulating the conduct of consumer
reporting agencies, furnishers, and users of consumer reports. In some
cases, State legislation provides protections to consumers that go
above and beyond the requirements of the FCRA.
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\3\ 15 U.S.C. 1681(c).
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These State statutes exist alongside the FCRA, which says that--
subject to certain exceptions--it ``does not annul, alter, affect, or
exempt any person subject to [the FCRA] from complying with the laws of
any State with respect to the collection, distribution, or use of any
information on consumers, or for the prevention or mitigation of
identity theft, except to the extent that those laws are inconsistent
with any provision of this subchapter, and then only to the extent of
the inconsistency.'' \4\ In other words, State laws that are not
``inconsistent'' with the FCRA--including State laws that are more
protective of consumers than the FCRA--are generally not preempted.
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\4\ 15 U.S.C. 1681t(a); see also Davenport v. Farmers Ins.
Group, 378 F.3d 839, 842 (8th Cir. 2004) (``The FCRA makes clear
that it is not intended to occupy the entire regulatory field with
regard to consumer reports.'').
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The FCRA also expressly preempts certain categories of State laws.
As relevant here, 15 U.S.C. 1681t(b) says that ``[n]o requirement or
prohibition may be imposed under the laws of any State with respect to
any subject matter regulated under'' certain sections or subsections of
the FCRA:
<bullet> subsection (c) or (e) of section 1681b, relating to the
prescreening of consumer reports;
<bullet> section 1681i, relating to the time by which a consumer
reporting agency must take any action, including the provision of
notification to a consumer or other person, in any procedure related to
the disputed accuracy of information in a consumer's file, [with an
exception for laws in effect on September 30, 1996];
<bullet> subsections (a) and (b) of section 1681m, relating to the
duties of a person
[[Page 41043]]
who takes any adverse action with respect to a consumer;
<bullet> section 1681m(d), relating to the duties of persons who
use a consumer report of a consumer in connection with any credit or
insurance transaction that is not initiated by the consumer and that
consists of a firm offer of credit or insurance;
<bullet> section 1681c, relating to information contained in
consumer reports, [with an exception for laws in effect on September
30, 1996];
<bullet> section 1681s-2, relating to the responsibilities of
persons who furnish information to consumer reporting agencies [with
exceptions for certain enumerated State laws]
<bullet> section 1681g(e), relating to information available to
victims under section 1681g(e);
<bullet> section 1681s-3, relating to the exchange and use of
information to make a solicitation for marketing purposes;
<bullet> section 1681m(h), relating to the duties of users of
consumer reports to provide notice with respect to terms in certain
credit transactions;
<bullet> subsections (i) and (j) of section 1681c-1 relating to
security freezes; or
<bullet> subsection (k) of section 1681c-1, relating to credit
monitoring for active duty military consumers.
Similarly, 15 U.S.C. 1681t(b)(5) says that ``[n]o requirement or
prohibition may be imposed under the laws of any State with respect to
the conduct required by the specific provisions of'' certain sections
or subsections of the FCRA:
<bullet> section 1681c(g);
<bullet> section 1681c-1;
<bullet> section 1681c-2;
<bullet> section 1681g(a)(1)(A);
<bullet> section 1681j(a);
<bullet> subsections (e), (f), and (g) of section 1681m;
<bullet> section 1681s(f);
<bullet> section 1681s-2(a)(6); or
<bullet> section 1681w.
This interpretive rule clarifies the preemptive scope of 15 U.S.C.
1681t(b), with a particular focus on 15 U.S.C. 1681t(b)(1) and (5),
which have been the subject of recent legal challenges to State
laws.\5\ As 15 U.S.C. 1681t(b)(1) says, that provision preempts only
those State laws ``with respect to any subject matter regulated under''
certain sections or subsections of the FCRA. Similarly, 15 U.S.C.
1681t(b)(5) preempts only those States law ``with respect to the
conduct required by the specific provisions of'' certain sections or
subsections of the FCRA. The term ``with respect to'' indicates that
Congress intended these provisions to have a narrow sweep. As the
Supreme Court has held in a similar context, ``with respect to'' means
to ``concern.'' In other words, section 1681t(b)(1) does not preempt
State laws unless they concern a subject matter regulated under the
enumerated portions of the FCRA. Similarly, section 1681t(b)(5) does
not preempt State laws unless they concern conduct required by the
enumerated portions of the FCRA.
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\5\ The CFPB ``encourages State Officials to consult with the
Bureau whenever interpretation of Federal consumer financial law, as
defined in section 1002(14) of the Dodd-Frank Act, . . . is relevant
to a State regulatory or law enforcement matter, even if it is not
the type of action for which notification is required'' pursuant to
the State Official Notification Rule. 77 FR 39112, 39113 (June 29,
2012). The Office of the New Jersey Attorney General recently
notified the CFPB about pending litigation in which the plaintiff
alleges that a New Jersey consumer protection statute is preempted
by the FCRA.
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II. Analysis
The Supremacy Clause of the United States Constitution says that
``the Laws of the United States'' shall be ``the supreme Law of the
Land . . . any Thing in the Constitution or Laws of any state to the
Contrary notwithstanding.'' Art. VI, cl. 2. When a Federal statute
includes a preemption clause--as the FCRA does--``[t]he purpose of
Congress is the ultimate touchstone'' in interpreting such a clause.
Altria Grp., Inc. v. Good, 555 U.S. 70, 76 (2008). ``Congressional
intent, of course, primarily is discerned from the language of the pre-
emption statute and the `statutory framework' surrounding it.''
Medtronic, Inc. v. Lohr, 518 U.S. 470, 486 (1996). Thus, any preemption
analysis must ``focus on the plain wording of the clause.'' Puerto Rico
v. Franklin California Tax-Free Tr., 579 U.S. 115, 125 (2016).
Focusing on the plain text of sections 1681t(b)(1) and 1681t(b)(5),
it is apparent that both provisions have a narrow and targeted scope.
A. Under 15 U.S.C. 1681t(b)(1), State Laws Are Not Preempted Unless
They Are ``With Respect to Any Subject Matter Regulated Under'' Certain
Sections or Subsections of the FCRA
Section 1681t(b)(1) has eleven subsections, each of which follows
the same syntax. Each subsection preempts State laws ``with respect to
any subject matter regulated under'' an enumerated part of the FCRA
(e.g., section 1681c). Following the enumerated section of the FCRA
comes a parenthetical phrase beginning with ``relating to'' that
describes or further narrows the section that has just been enumerated.
For instance, section 1681(b)(1)(E) generally preempts State laws
``with respect to any subject matter regulated under section 1681c of
this title, relating to information contained in consumer reports.''
Preemption under section 1681t(b)(1) thus depends on the meaning of
both the ``with respect to'' and ``relating to'' clauses.
Foremost, State laws are not preempted unless they are ``with
respect to any subject matter regulated under'' the enumerated sections
of the FCRA. In the case of section 1681t(b)(1)(E), State laws would
not be preempted unless they are ``with respect to any subject matter
regulated under section 1681c.''
In addition, a State law is preempted under section 1681t(b)(1)
only if it also falls within the description in the ``relating to''
parenthetical. In some cases, the ``relating to'' parenthetical merely
reiterates the enumerated section. For instance, 15 U.S.C.
1681t(b)(1)(C) preempts State laws ``with respect to any subject matter
regulated under subsections (a) and (b) of section 1681m of this title,
relating to the duties of a person who takes any adverse action with
respect to a consumer.'' Both subsections (a) and (b) of section 1681m
lay out certain duties of a person who takes an adverse action with
respect to a consumer. Thus, both the ``with respect to'' clause and
the ``relating to'' clause of section 1681t(b)(1)(C) have the same
scope.
But in other cases, the ``relating to'' clause serves as a further
limitation on the ``with respect to'' clause. For example (and as noted
above), section 1681t(b)(1)(E) preempts State laws ``with respect to
any subject matter regulated under section 1681c of this title,
relating to information contained in consumer reports.'' Although
section 1681c primarily contains limitations on information that can be
included in consumer reports, it also includes other miscellaneous
provisions. See, e.g., 15 U.S.C. 1681c(g) (requirement for truncating
credit card and debit card numbers in receipts provided to cardholder).
Thus, the plain text of section 1681t(b)(1)(E) indicates that only
those State laws ``with respect to'' section 1681c that also ``relate
to'' information contained in consumer reports are preempted.
It has been argued by some that the preemptive scope of section
1681t(b)(1) is defined only by the ``relating to'' clause. For example,
in Consumer Data Indus. Ass'n v. Frey, 26 F.4th 1 (1st Cir. 2022), the
plaintiffs argued that section 1681t(b)(1)(E) preempts any State laws
``relating to information contained in consumer reports,'' regardless
of whether the law is ``with respect to any subject matter regulated
under'' section 1681c. As courts have correctly held,
[[Page 41044]]
that ``is not the most natural reading of the statute's syntax and
structure.'' Frey, 26 F.4th at 6. That interpretation would render the
``with respect to'' clause surplusage. A statute, however, ``ought to
be construed in a way that `no clause, sentence, or word shall be
superfluous, void, or insignificant.'' Duncan v. Walker, 533 U.S. 167,
174 (2001). Moreover, Congress knows how to broadly preempt State laws
that are ``related to'' fields or topics. For instance, the Employee
Retirement Income Security Act ``supersede[s] any and all State laws
insofar as they may now or hereafter relate to any employee benefit
plan.'' 29 U.S.C. 1144(a). Congress could have used similar syntax in
the FCRA--but it did not. Instead, Congress made clear that a State law
is not preempted by section 1681t(b)(1) unless it falls within the
``with respect to'' clause.
Whether a particular State law is ``with respect to any subject
matter regulated under'' the enumerated sections of the FCRA will
depend on the facts and circumstances. But it bears noting that the
phrase ``with respect to any subject matter regulated under'' is an
important limiting factor. As the Supreme Court has noted in a case
involving a statute that--like the FCRA--included a preemption
provision with both ``related to'' and ``with respect to'' phrases, the
``with respect to'' phrase served to ``massively limit[ ] the scope of
preemption.'' Dan's City Used Cars, Inc. v. Pelkey, 569 U.S. 251, 261
(2013). The ``with respect to'' phrase ``necessarily reaches a subset
of laws narrower than those that merely relate to information contained
in consumer reports.'' Frey, 26 F.4th at 8. It narrows the universe of
preemption only to those laws that ``concern'' the subject matter
regulated under the enumerated FCRA sections. Dan's City Used Cars, 569
U.S. at 261; see also, e.g., Frey, 26 F.4th at 7 (section
1681t(b)(1)(E) ``preempt[s] those claims that concern subject matter
regulated under section 1681c''); Galper v. JP Morgan Chase Bank, N.A.,
802 F.3d 437, 446 (2d Cir. 2015) (section 1681t(b)(1)(F) ``preempts
only those claims that concern a furnisher's responsibilities). Thus,
if a State law does not ``concern'' the subject matters regulated under
the FCRA sections specified in section 1681t(b)(1), it is not preempted
by that clause.
It bears emphasis that section 1681t(b)(1) does not preempt all
State laws relating to the content or information contained in consumer
reports. Indeed, the legislative history of this provision confirms
that it was intended to provide only ``limited'' preemption on
``procedural'' issues.\6\
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\6\ See 141 Cong. Rec. S5450 (daily ed. Apr. 5, 1995) (statement
of Sen. Bond) (``This bill also contains limited Federal preemption
to ensure that there are uniform Federal standards to govern a
number of procedural issues which are part of credit reporting and
which will reduce the burdens on the credit industry from having to
comply with a variety of different State requirements. For example,
the bill preempts requirements regarding prescreening, information
shared among affiliates, reinvestigation timetables, obsolescence
time periods and certain disclosure forms.'').
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For example, section 1681t(b)(1)(E) preempts State laws ``with
respect to any subject matter regulated under'' section 1681c
``relating to information contained in consumer reports.'' In turn,
section 1681c states requirements relating to four topics relating to
information contained in consumer reports: (1) obsolescence, i.e., how
long certain specific types of information may continue to appear on a
consumer report; \7\ (2) certain information about medical information
furnishers; \8\ (3) certain information relating to veterans' medical
debt; \9\ and (4) certain information that must be included in a
consumer report (e.g., the fact that the consumer has disputed
information provided by a furnisher to the consumer reporting agency
issuing the report).\10\
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\7\ 15 U.S.C. 1681c(a)(1)-(5).
\8\ 15 U.S.C. 1681c(a)(6).
\9\ 15 U.S.C. 1681c(a)(7)-(8).
\10\ 15 U.S.C. 1681c(d), (e), (f).
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The legislative history of the FCRA preemption provision confirms
that only subject matter at this level of specificity is subject to
preemption. The legislative history expressly references ``obsolescence
periods'' as an example of a subject matter governed by preemption--not
the broader subject matter of the content of a consumer report more
generally.\11\ Hence, FCRA 1681t(b)(1)(E) does not preempt State laws
about subject matter regarding the content of or information on
consumer reports beyond these topics.\12\
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\11\ See 141 Cong. Rec. S5450 (daily ed. Apr. 5, 1995)
(statement of Sen. Bond) (referring to ``obsolescence time periods''
as an example of a subject matter on which there would be
preemption).
\12\ To be sure, the title of Section 1681c is stated more
broadly as ``Requirements relating to information contained in
consumer reports.'' But the title of a statutory provision is of
only limited significance. See, e.g., Bhd. of R.R. Trainmen v. Balt.
& Ohio R.R. Co., 331 U.S. 519, 529 (explaining that titles and
headings ``are but tools available for the resolution of a doubt,''
``[b]ut they cannot undo or limit that which the text makes
plain''). And the actual subject matter regulated by the text of
Section 1681c is limited to the narrow topics actually addressed.
Further, the legislative history confirms that the subject matter
intended to be preempted is only the specific topics regulated in
Section 1681c.
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For instance, although how long the specific types of information
listed in section 1681c may continue to appear on a consumer report is
a subject matter regulated under section 1681c, what or when items
generally may be initially included on a consumer report is not a
subject matter regulated under section 1681c. Indeed, section
1681c(a)(7) provides requirements about when veterans' medical debt,
specifically, may be included on a consumer report by a nationwide
consumer reporting agency, but nothing in section 15 U.S.C. 1681c
addresses what or when information of other types may initially be
included on reports.\13\ (For example, section 1681c(a)(5) regulates
how long ``adverse item[s] of information, other than records of
convictions of crimes'' may appear on consumer reports, but not whether
or when adverse items may initially appear on a consumer report.)
Similarly, only 1681c(a)(6) and (8), relating specifically to
information about medical information furnishers and veterans' medical
debt, contain restrictions on the content of a consumer report; the
other provisions restrictions relate only to how long information may
appear. section 1681c therefore does not provide any general
restrictions on the content of a consumer report. Accordingly, 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(b)(1)(E).
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\13\ Section 1681c(a)(1)-(5) regulates when certain types of
information that ``antedate the report'' by ``more than'' certain
periods of time may appear. But only 1681c(a)(7), relating
specifically to veterans' medical debt, regulates when a type of
information that antedates the report by ``less than'' a period of
time may appear. Hence, only 1681c(a)(7), which is limited to
veterans' medical debt, regulates when a type of information that
antedates a report by less than a certain period of time may appear.
Moreover, restrictions on what or when types of information may
initially appear on a consumer report do not alter the period of
time that information may remain on a report under Section 1681c.
The restrictions in Section 1681c(a)(1)-(5) each provide that
information may remain on a report for a certain period of time
following the date that particular events occurred. A restriction on
what or when information may initially appear on a report would not
alter the date of those events. Such a restriction therefore does
not change the date on which Section 1681c(a)(1)-(5) prohibits the
information from continuing to appear on the report.
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States therefore retain substantial flexibility to pass laws
involving consumer reporting to reflect emerging problems affecting
their local economies and citizens. For instance, medical debt that
shows up in a consumer report can be factored into a consumer's credit
score, though whether and how these debts affect their scores varies
[[Page 41045]]
depending on the score model.\14\ Research by the CFPB has found that
medical collections are less predictive of future consumer credit
performance than nonmedical collections.\15\ Additionally, paid medical
collections are less predictive of future performance than unpaid
medical collections. Individuals with more medical than non-medical
collections and individuals with more paid than unpaid medical
collections had delinquency rates that were comparable to those of
individuals with credit scores of 10 points higher and 20 points
higher, respectively. In other words, these individuals were less
likely to be delinquent than other individuals with the same credit
score. Nonetheless, some widely used models still weight medical and
nonmedical collections equally.\16\ This means that consumers with
medical debt may be negatively affected if creditors use older scoring
models that may overweight medical debt. To address these concerns and
others, States may pass laws addressing the furnishing and reporting of
medical debt.
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\14\ CFPB, Medical Debt Burden in the United States, at 27 (Feb.
2022), <a href="https://files.consumerfinance.gov/f/documents/cfpb_medical-debt-burden-in-the-united-states_report_2022-03.pdf">https://files.consumerfinance.gov/f/documents/cfpb_medical-debt-burden-in-the-united-states_report_2022-03.pdf</a>.
\15\ CFPB, Data point: Medical debt and credit scores (May
2014), <a href="https://files.consumerfinance.gov/f/201405_cfpb_report_data-point_medical-debtcredit-scores.pdf">https://files.consumerfinance.gov/f/201405_cfpb_report_data-point_medical-debtcredit-scores.pdf</a>.
\16\ Medical Debt Burden in the United States, at 27-28.
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If a State law were to forbid a consumer reporting agency from
including medical debt in a consumer report for a certain period of
time after the debt was incurred, such a law would generally not be
preempted. Section 1681c does not regulate the subject matter of when
medical debt (or debt generally) may be first included in a consumer
report. As noted above, section 1681t(b)(1) does not preempt all State
laws relating to the content or information contained in consumer
reports; rather, 1681t(b)(1) preempts only State laws concerning the
subject matter regulated under the specified FCRA sections. Hence, as
described above, 1681t(b)(1)(E) preempts State laws only with respect
to the four specific topics regulated under section 1681c. Section
1681c(a)(7) provides requirements regarding veterans' medical debt, but
section 1681c does not regulate the subject matter of medical debt
information more generally. Further, although medical debt information
may be ``adverse information'' regulated under 1681c((a)(5), as
explained above, that provision regulates only the subject of how long
such information may appear on a consumer report, not the content of
the information or when such information may initially appear.
Likewise, if a State law 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), which voids only 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.'' Section 1681s-2 sets forth several requirements
for furnishers in order to assure the accuracy of information provided
to consumer reporting agencies. For instance, ``[a] person shall not
furnish any information relating to a consumer to any consumer
reporting agency if the person knows or has reasonable cause to believe
that the information is inaccurate.'' \17\ However, section 1681s-2
says nothing about when a furnisher may or must begin furnishing
information about a consumer's account. Consistent with the discussion
above about section 1681, the subject matter of section 1681s-2 that is
subject to preemption is limited to these topics that are actually
addressed in the section. Accordingly, when a furnisher may or must
begin furnishing information about a consumer's account is not a
``subject matter regulated under section 1681s-2.'' Thus, a State law
governing when a furnisher may begin furnishing on a consumer's account
(including medical debt) would not be preempted by section
1681t(b)(1)(F).
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\17\ 15 U.S.C. 1681s-2(a)(1)(A).
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Additionally, for example, the CFPB has noted that rental
information in consumer reports plays a critical role in consumers'
access to rental housing, credit, and other opportunities.\18\ The CFPB
has received consumer complaints about receiving collection notices
from landlords or debt collectors for rent-related charges and fees
they viewed as questionable.\19\ These charges may then appear on their
consumer reports. Complaints to the CFPB also indicate that tenant
screening companies may report inaccurate or misleading criminal and
civil information, which led to consumers being denied for housing
applications,\20\ and the Federal Trade Commission has found that
certain tenant screening companies have failed to follow reasonable
procedures to ensure the accuracy of their reports about potential
tenants.\21\ CFPB examiners have also found that the oversight of
public records providers by one or more consumer reporting agencies was
weak and required corrective action.\22\ Further, research suggests
that a significant number of eviction records ``contain ambiguous
information on how the case was resolved or falsely represent a
tenant's eviction history.'' \23\ There is little or no empirical
research showing that tenant screening report content is reliably
predictive of future tenant behavior. For example, the CFPB has
expressed concern regarding how reliably predictive pandemic era rental
data is on a consumer's future performance.\24\ To address these
concerns and others, States may pass laws addressing the furnishing and
reporting of rental information.
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\18\ CFPB, Bulletin 2021-03: Consumer Reporting of Rental
Information, at 2 (July 2021), <a href="https://files.consumerfinance.gov/f/documents/cfpb_consumer-reporting-rental-information_bulletin-2021-03_2021-07.pdf">https://files.consumerfinance.gov/f/documents/cfpb_consumer-reporting-rental-information_bulletin-2021-03_2021-07.pdf</a>.
\19\ CFPB, Complaint Bulletin: COVID-19 issues described in
consumer complaints, at 14 (July 2021), <a href="https://files.consumerfinance.gov/f/documents/cfpb_covid-19-issues-described-consumer-complaints_complaint-bulletin_2021-07.pdf">https://files.consumerfinance.gov/f/documents/cfpb_covid-19-issues-described-consumer-complaints_complaint-bulletin_2021-07.pdf</a>.
\20\ CFPB, Complaint Bulletin: COVID-19 issues described in
consumer complaints, at 15, <a href="https://files.consumerfinance.gov/f/documents/cfpb_covid-19-issues-described-consumer-complaints_complaint-bulletin_2021-07.pdf">https://files.consumerfinance.gov/f/documents/cfpb_covid-19-issues-described-consumer-complaints_complaint-bulletin_2021-07.pdf</a>.
\21\ See FTC v. RealPage, Inc. (Oct. 2018), <a href="https://www.ftc.gov/system/files/documents/cases/152_3059_realpage_inc_stipulated_order_10-16-18.pdf">https://www.ftc.gov/system/files/documents/cases/152_3059_realpage_inc_stipulated_order_10-16-18.pdf</a>; USA v.
AppFolio, Inc. (Dec. 2020), <a href="https://www.ftc.gov/system/files/documents/cases/ecf_1_-_us_v_appfolio_complaint.pdf">https://www.ftc.gov/system/files/documents/cases/ecf_1_-_us_v_appfolio_complaint.pdf</a>.
\22\ CFPB, Supervisory Highlights, at 6 (Summer 2015), <a href="https://files.consumerfinance.gov/f/201506_cfpb_supervisory-highlights.pdf">https://files.consumerfinance.gov/f/201506_cfpb_supervisory-highlights.pdf</a>.
\23\ Adam Porton, Ashley Gromis, and Matthew Desmond,
Inaccuracies in Eviction Records: Implications for Renters and
Researchers, Housing Policy Debate 31:3-5 (Sept. 2021).
\24\ CFPB, Bulletin 2021-03: Consumer Reporting of Rental
Information, at 10 (July 2021), <a href="https://files.consumerfinance.gov/f/documents/cfpb_consumer-reporting-rental-information_bulletin-2021-03_2021-07.pdf">https://files.consumerfinance.gov/f/documents/cfpb_consumer-reporting-rental-information_bulletin-2021-03_2021-07.pdf</a>.
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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 1681t(b)(1). As noted above,
section 1681t(b)(1)(E) preempts State laws only ``with respect to any
subject matter regulated under'' section 1681c ``relating to
information contained in consumer reports.'' Again, 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. Although such information may be information about
``[c]ivil suits, civil judgments, and records of arrest'' regulated
under section 1681c((a)(2) or ``adverse information'' regulated under
section
[[Page 41046]]
1681c((a)(5), as explained above, those provisions regulate only the
subject of how long such information may appear on a consumer report,
not the content of the information. Section 1681t(b)(1) preempts only
State laws concerning the subject matter regulated under the specified
FCRA sections, and whether or when information such as eviction
information, rental arrears, or arrest records appears on a consumer
report is not such a subject matter.
B. Under 15 U.S.C. 1681t(b)(5), Only Those State Laws ``With Respect to
the Conduct Required by'' Certain Sections or Subsections of the FCRA
Are Preempted
Similarly, Congressional purpose in 15 U.S.C. 1681t(b)(5) is
evident from its plain text. It has nine subsections, and each follows
the same syntax: State laws are preempted to the extent they are ``with
respect to the conduct required by the specific provisions of [an
enumerated FCRA provision].'' For example, 15 U.S.C. 1681t(b)(5)(E)
preempts State laws ``with respect to the conduct required by the
specific provisions of section 1681j(a),'' which sets forth
requirements for nationwide consumer reporting agencies and nationwide
specialty consumer reporting agencies to provide free annual credit
reports to consumers. A State law on this topic--for example, a State
law requiring consumer reporting agencies to provide semi-annual credit
reports to consumers--would likely be ``with respect to the conduct
required'' by this provision. On the other hand, if a State law does
not concern ``the conduct required by'' the enumerated section--the
annual disclosure requirement, in the case of section 1681j(a)--then it
is not preempted. For example, section 1681j(a) provides no
requirements regarding the language in which disclosures of information
are provided. Accordingly, if a State law required that a consumer
reporting agency provide information required by the FCRA at the
consumer's requests in languages other than English, such a law would
generally not be preempted by section 1681t(b)(5)(E).
III. Regulatory Matters
This is an interpretive rule issued under the Bureau's authority to
interpret the Dodd-Frank Wall Street Reform and Consumer Protection Act
(CFPA), including under section 1022(b)(1) of the CFPA, which
authorizes guidance as may be necessary or appropriate to enable the
Bureau to administer and carry out the purposes and objectives of
Federal consumer financial laws, such as the CFPA.\25\
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\25\ 12 U.S.C. 5512(b)(1).
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As an interpretive rule, this rule is exempt from the notice-and-
comment rulemaking requirements of the Administrative Procedure
Act.\26\ Because no notice of proposed rulemaking is required, the
Regulatory Flexibility Act does not require an initial or final
regulatory flexibility analysis.\27\ The Bureau has also determined
that this interpretive rule does not impose any new or revise any
existing recordkeeping, reporting, or disclosure requirements on
covered entities or members of the public that would be collections of
information requiring approval by the Office of Management and Budget
under the Paperwork Reduction Act.\28\
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\26\ 5 U.S.C. 553(b).
\27\ 5 U.S.C. 603(a), 604(a).
\28\ 44 U.S.C. 3501-3521.
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Pursuant to the Congressional Review Act,\29\ the Bureau will
submit a report containing this interpretive rule and other required
information to the United States Senate, the United States House of
Representatives, and the Comptroller General of the United States prior
to the rule's published effective date. The Office of Information and
Regulatory Affairs has designated this interpretive rule as not a
``major rule'' as defined by 5 U.S.C. 804(2).
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\29\ 5 U.S.C. 801 et seq.
Rohit Chopra,
Director, Consumer Financial Protection Bureau.
[FR Doc. 2022-14150 Filed 7-8-22; 8:45 am]
BILLING CODE 4810-AM-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.