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On December 9, the CFPB announced its release of an advance notice of proposed rulemaking to gather information in preparation for the release of a proposed rule to address concerns related to information furnished to credit reporting agencies (CRAs) concerning coerced debt and inaccurate credit reporting affecting survivors of domestic violence and elder abuse, among other forms of financial abuse.
Specifically, the advance notice of proposed rulemaking seeks public comment on revising the definitions of "identity theft" and "identity theft report" under Regulation V, which implements the Fair Credit Reporting Act (FCRA), along with other related amendments to Regulation V, to address transactions conducted without the consumer's effective consent.
In its press release, the CFPB noted that abusers often use coerced debt as a means of control, forcing victims to take on financial obligations through threats, violence, or manipulation.This can include opening accounts in the victim's name without their knowledge, coercing them into signing financial documents, or incurring debt on shared accounts. The Bureau further noted that traditionally marginalized groups, such as women of color, are disproportionately affected by financial abuse and as a result face nearly double the average debt burden.The Bureau argues that removing coerced debt from credit reports can significantly improve financial abuse survivors' financial standing, with one-third experiencing credit score increases of 20 points or more, enabling access to better loan terms.
The Advance Notice of Proposed Rulemaking seeks input from consumer advocates, credit reporting companies, and the public on:
- The prevalence and impact of coerced debt, including its effects within the credit reporting system;
- Evidence linking coerced debt to a survivor's credit risk;
- Obstacles survivors of economic abuse face in accessing protections under federal or state law;
- Challenges posed by coerced debt for specific groups, such as survivors of intimate partner violence, gender-based violence, older adults, and children in foster care; and
- Potential documentation or self-attestation processes for proving that a debt was coerced.
The deadline for submitting comments on the advance notice is March 7, 2025.
Putting It Into Practice: This development marks the CFPB's latest push to expand FCRA in a year that has seen a flurry of FCRA-related rulemakings from the Bureau (previously discussed here, here, here, and here).Any proposed rulemaking that results from this solicitation for public comment will occur under a CFPB Director selected by the incoming administration.We anticipate the new Director may roll back or revoke much of the regulatory guidance issued during the Biden administration. Accordingly, we will continue to monitor how this proposed expansion of FCRA plays out under the new administration.
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