This week, New York Governor Andrew Cuomo issued a press release directing the New York Department of State to issue a new regulation impacting consumer reporting agencies.  The new regulation was adopted on an emergency basis and went into immediate effect in order to protect consumers from identity theft and other potential economic harms that may arise following a data breach.

The regulation requires consumer reporting agencies to:

  • Identify dedicated points of contact for the Division of Consumer Protection to obtain information to assist New York consumers in the event of a data breach;
  • Respond within 10 days to information requests made on behalf of consumers by the Division of Consumer Protection;
  • File a form with certain information to the Division of Consumer Protection, including all fees associated with the purchase or use of products and services marketed as identity theft protection products as well as a listing and description of all business affiliations and contractual relationships with any other entities relating to the provision of any identity theft prevention or mitigation products or services; and
  • In any advertisements or other promotional materials, disclose any and all fees associated with the purchase or use of proprietary products offered to consumers for the prevention of identity theft, including, if offered on a trial basis, any and all fees charged for its purchase or use after the trial period and the requisites of cancellation of such continued use.

The protections appear targeted to address alleged abuses by the consumer reporting industry following the recent Equifax data breach.  Cuomo also announced that the Division of Consumer Protection will be issuing a demand letter to Equifax for information to assess the damage and risk of identity theft to New York State consumers resulting from the data breach.

Cuomo did not address the status of previously announced proposed regulations of the consumer credit reporting agencies by the New York Department of Financial Services.

Last week, members of the Senate Banking Committee announced that they had reached bipartisan agreement on “legislative proposals to improve our nation’s financial regulatory framework and promote economic growth.”  Following the announcement, Committee members released a draft of a bill (S. 2155), the “Economic Growth, Regulatory Relief, and Consumer Protection Act.”  A markup of the bill is scheduled for December 5, 2017.  Many observers believe that due to its bipartisan support, there is a strong likelihood that the bill will be enacted as part of a regulatory relief package.

Provisions of the bill relevant to providers of consumer financial services include the following:

Small Depository Qualified Mortgage (Section 101). For an insured depository institution or insured credit union, the bill would create a qualified mortgage loan entitled to the safe harbor under the ability to repay rule.  In general, the depository institution or credit union would need to hold the loan in portfolio, and the loan could not have an interest-only or negative amortization feature and would need to comply with limits on prepayment penalties.  While the creditor would need to consider and document the debt, income and financial resources of the consumer, it would not have to follow Appendix Q to the ability to repay rule.

Appraisal Exemption for Rural Areas (Section 103). The bill would provide an exemption from any appraisal requirement for a federally related transaction involving real property if (1) the property is located in a rural area, (2) the loan is less than $400,000, (3) the originator is subject to oversight by a federal financial institution regulator, and (4) no later than three days after the Closing Disclosure under the TRID rule is given to the consumer, the originator has contacted at least three state certified or licensed appraisers, as applicable, and has documented that no state certified or licensed appraiser, as applicable, is available within a reasonable period of time.  The applicable federal financial institution regulator would determine what constitutes a reasonable period of time.  The exemption would not apply to high-cost loans under the Truth in Lending Act (TILA), or when the applicable federal financial institution regulator requires the financial institution to obtain an appraisal to address safety and soundness concerns.

Home Mortgage Disclosure Act Triggers (Section 104). The bill would increase the loan volume trigger to be a reporting company under the revised Home Mortgage Disclosure Act (HMDA) rule from 25 closed-end mortgage loan originations in each of the preceding two calendar years to 500 such loans in each of the two preceding calendar years.  The 25 closed-end loan trigger went into effect in 2017 for depository institutions, and goes into effect on January 1, 2018 for non-depository institutions.

The bill also would make permanent under the revised HMDA rule a trigger of 500 open-end mortgage loan originations in each of the preceding two calendar years.  As reported previously, the revised HMDA rule provided for a trigger effective January 1, 2018 of 100 open-end mortgage loan originators in each of the preceding two calendar years, and in August 2017 the CFPB temporarily raised the trigger for 2018 and 2019 to 500 open-end mortgage loans in each of the preceding two calendar years.  The bill includes a requirement for the Comptroller General of the United States to conduct a study after two years to evaluate the impact of the amendments on the amount of data available under HMDA, and submit a report to Congress within three years.

Loan Originator Transition Authority (Section 106). Subject to various conditions, the bill would establish temporary transition authority for an individual loan originator to conduct origination activity for up to 120 days from when the individual submits an application to be licensed in a state in cases in which the individual is (1) registered and then becomes employed by a state-licensed mortgage company or (2) licensed in a state and then seeks to conduct loan origination activity in another state.

TRID Rule Provisions (Section 110). The bill includes a provision that apparently is intended to eliminate the need for a second three business day waiting period under the TILA/Real Estate Settlement Procedures Act Integrated Disclosure (TRID) rule in cases in which the annual percentage rate decreases and becomes inaccurate after the initial Closing Disclosure is provided, thus triggering the need for a revised Closing Disclosure.  Currently, the TRID rule requires both a revised Closing Disclosure and a new three business day waiting period before consummation may occur.  As drafted, however, the bill would amend the TILA timing requirements for high-cost mortgages under the Home Ownership and Equity Protection Act.  The TRID rule timing requirements are set forth in Regulation Z and not TILA.  Thus, revisions to the bill are necessary to achieve the intended goal.

The bill also includes a sense of Congress provision with regard to the TRID rule, which provides that the CFPB should endeavor to provide clearer, authoritative guidance on (1) the applicability of the rule to mortgage assumptions, (2) the applicability of the rule to construction-to-permanent home loans, and the conditions under which such loans can be properly originated, and (3) the extent to which lenders can, without liability, rely on the model disclosures published by the CFPB under the rule if recent changes to the rule are not reflected in sample TRID rule forms published by the CFPB.

Credit Report Alerts (Section 301). The bill would amend the Fair Credit Reporting Act (FCRA) to require consumer reporting agencies to keep a fraud alert requested by a consumer in the consumer’s file for at least one year and allow a consumer to have one free freeze alert placed on his or her file every year and remove that alert free of charge.  Consumer reporting agencies would also have to provide free freeze alerts requested on behalf of a minor and remove such alerts free of charge.

Credit Reports of Military Veterans (Section 302). The bill would amend the FCRA to require consumer reporting agencies to exclude from credit reports certain information relating to medical debts of veterans and would establish a dispute process for veterans seeking to dispute medical debt information with a consumer reporting agency.

Protection of Seniors (Section 303). The bill would, subject to certain conditions, provide immunity from civil or administrative liability to individuals and financial institutions for disclosing the suspected exploitation of a senior citizen to various government agencies, including state or federal financial regulators, the SEC, or a law enforcement agency.

Cyber Threats (Section 501). The bill would require the Secretary of the Treasury to submit a report to Congress on the risks of cyber threats to financial institutions and U.S. capital markets that includes an analysis of how the appropriate federal banking agencies and the SEC are addressing such risks.  The report must also include Treasury’s recommendation on whether any federal banking agency or the SEC “needs additional legal authorities or resources to adequately assess and address material risks of cyber threats.”  (We note that for several years, the FTC has been calling for such additional authority, specifically in the form of rulemaking authority.  Due to the limitations of the Banking Committee’s jurisdiction, the bill’s provision focuses exclusively on the federal banking agencies, and gives no recognition to the important role of the FTC—which is under the Senate Commerce Committee’s jurisdiction–in addressing cyber threats.

We will be publishing another blog post in the near future about other provisions of the bill that may be of interest to our blog readers.

The CFPB has published the following notices in today’s Federal Register:

  • Request for Information. Through the RFI, the CFPB seeks to learn more about consumers’ experience with access to free credit scores and the experience of companies and nonprofit credit and financial counseling providers offering their customers and the general public such access.  According to the CFPB, it will use the information gathered through the RFI to identify educational content that is providing the most value to consumers, to identify additional content the CFPB and others could develop to increase consumer understanding of credit reports and scores, and to gain a broader understanding of industry practices that best support educating consumers.  In addition to consumers and consumer advocacy groups, the interested members of the public from whom the CFPB encourages comments include credit card companies and other lenders.  Comments must be received on or before February 12, 2018 to be assured consideration.
  • Update to Free Credit Score Access List. In March 2017, the CFPB published a list of companies that had told the CFPB they offered existing credit card customers access to a free credit score.  In the notice, the CFPB states that it plans to update this list and provides criteria credit card issuers must meet to be included in the list. Companies that were included in the March 2017 list must submit a new entry to be included on the updated list.  The CFPB also states that it is considering whether to expand its list of companies offering free credit reports to include companies in other markets.  Companies that offer consumers access to free credit scores and meet the same criteria it uses for card issuers are invited to contact the CFPB if they would like to be included in a possible list.  Comments must be received on or before January 12, 2018 to be assured of consideration.


An Assistant Illinois Attorney General, in a letter sent to Experian’s CEO on behalf of the Illinois AG and the AGs of 35 other states and the District of Columbia, has asked Experian not to charge any credit freeze-related fees.

In the letter, which references the recent Equifax data breach, the Assistant Illinois AG notes that seven states currently prohibit consumer reporting agencies from charging fees to place a credit freeze and at least two others have introduced legislation that would require CRAs to offer free credit freezes.

In addition to Illinois, the other states joining the letter were: Arkansas, Colorado, Delaware, Florida, Hawaii, Idaho, Iowa, Kansas, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Utah, Vermont, Virginia, Washington, Wisconsin, and Wyoming.


The cities of Chicago and San Francisco and the Massachusetts Attorney General have filed the first enforcement actions against Equifax following the announcement of a data breach affecting an estimated 143 million consumers.  Equifax announced the data breach on September 7, 2017, after hackers allegedly exploited a vulnerability in open-source software used by Equifax to create its online consumer dispute portal.

The first suits were filed on September 26th by the Massachusetts Attorney General and San Francisco.  Massachusetts’s complaint was filed in Superior Court in Suffolk County and alleges that Equifax knew or should have known about the vulnerability and that hackers were attempting to exploit it, but that Equifax failed to take known and available measures to prevent the breach.  Massachusetts asserts claims for violations of the Massachusetts data privacy statute and the Massachusetts Consumer Protection Act prohibiting unfair and deceptive practices based on Equifax’s alleged failure to give timely notice of the breach, failure to safeguard personal information, and failure to take other actions that Equifax was uniquely positioned to provide that would have mitigated damages to Massachusetts consumers.  The Massachusetts Attorney General is seeking unspecified civil penalties, disgorgement of profits, restitution, costs and attorney’s fees.

San Francisco’s complaint, filed in the Superior Court of San Francisco, asserts claims under the California Business and Professions Code for unlawful, unfair or fraudulent business practices, alleging that Equifax failed to maintain reasonable security practices and procedures, failed to provide timely notice of the security breach, and failed to provide complete, plain and clear information when notice was provided.  The lawsuit seeks restitution for all California consumers, civil penalties up to $2,500 per violation of law, restitution, costs, and a court order requiring Equifax to implement and maintain appropriate security procedures in the future.

Finally, the City of Chicago filed suit on September 28th in Cook County Circuit Court and asserts claims arising under both state law and city ordinance.  Specifically, Chicago alleges Equifax violated a local ordinance prohibiting fraudulent, unfair, and deceptive business practices, as well as the Illinois Consumer Fraud and Deceptive Business Practices Act.  Chicago’s claims are based on allegations that Equifax failed to give prompt notice of the breach, failed to safeguard personal information, and deceived consumers by requiring them to waive their legal rights in exchange for credit monitoring services and by misrepresenting that the offered credit monitoring was free.  Chicago seeks civil monetary penalties in the amount of $10,000 for each day a violation has existed that involves a Chicago resident, restitution, and injunctive relief requiring Equifax to maintain adequate security measures to prevent data breaches.

These are likely just the first of many lawsuits to be filed against Equifax by state and local officials.  Further action at both the federal and state level seems all but certain.  For example, the Federal Trade Commission and Department of Justice have confirmed they are investigating the breach, and the New York Department of Financial Services confirmed that it recently issued a subpoena to Equifax for more information about the breach.  This vigorous and immediate government enforcement effort further supports our position that private class action lawsuits are an unnecessary and inappropriate tool for vindicating any harm caused by the data breach.  We will continue to follow these significant cases and update you as events unfold.


Last week, New York Governor Andrew Cuomo issued a press release directing the New York Department of Financial Services (“NYDFS”) to impose new rules on consumer reporting agencies (“CRAs”).  The proposed regulation would subject CRAs that issue consumer reports (as defined in a manner similar to the federal Fair Credit Reporting Act) about consumers located in New York to new requirements, including:

  • Annual registration with NYDFS – such registration must identify officers and/or directors that are responsible for the CRAs’ compliance with the new regulation;
  • Annual, and in some cases quarterly, information reporting requirements to NYDFS;
  • NYDFS examinations to be conducted as often as NYDFS considers “necessary”;
  • Prohibitions against various activities, such as including inaccurate information in a consumer report or engaging in any unfair, deceptive, abusive, and/or predatory acts or practices;
  • Communicating with consumers’ authorized representatives; and
  • Compliance with the newly issued NYDFS cybersecurity regulation (see Ballard alert).

Except for requiring CRAs to comply with the NYDFS cybersecurity regulation, it is unclear how the other requirements would address the risks posed by the recent Equifax breach, which was the purported reason for Governor Cuomo’s announcement.

Importantly, by requiring CRAs to register on an annual basis, the proposed regulation would empower NYDFS to suspend or revoke such registration based not only on the bad acts of a CRA itself, but also based on the bad acts of individual members, principals, officers, directors, or controlling persons at the CRA.  Without a valid registration, a CRA would be prohibited from providing any consumer reports about consumers located in New York, any companies licensed by NYDFS would be prohibiting from purchasing consumer reports from the CRA, and any companies licensed by NYDFS would be prohibited from furnishing information about consumers located in New York to the CRA.

Although a version of the proposed regulation was released with Governor Cuomo’s announcement, NYDFS is expected to release an official version for public comment in the coming weeks.  CRAs and companies that rely on CRAs to provide information about consumers located in New York should strongly consider participating in this rulemaking process.

An informative new American Banker podcast discusses recent and possible future changes to traditional credit scores, what they mean for industry, and possible industry responses.

The podcast begins with a discussion of changes that will take effect on July 1, 2017 to the public record data standards used by the “Big 3” consumer reporting agencies (CRAs) for the collection and updating of civil judgments and tax liens.  The new standards, which will apply to new and existing public record data on the CRAs’ credit reporting databases, create new verification requirements for data about civil judgments and tax liens, such as certain minimum consumer personal identifying information and a minimum frequency of courthouse visits to obtain new and updated data of at least every 90 days.

The experts participating in the podcast suggested that under current credit score models, the change could result in small credit score increases for impacted consumers averaging about 10 to 11 points.  However, they indicated that credit scores generated by newer credit score models under development that consider other data are unlikely to be impacted.

Among the topics discussed was the potential benefits and challenges in using alternative data in credit score models.  This past February, the CFPB issued a request for information seeking information about the use of alternative data and modeling techniques in the credit process.




The CFPB has issued a new report, “Data Point: Becoming Credit Visible,” that discusses how consumers transitioned out of “credit invisibility” and how such transitions differed across consumers of different ages and across neighborhood income levels.  For purposes of the report, the CFPB uses a definition of “credit invisibility” that includes only consumers without a credit record at one of the nationwide credit reporting companies.

The CFPB used a similar definition in its May 2015 report, “Data Point: Credit Invisibles,” in which the CFPB documented the results of its research into the demographic characteristics of consumers without traditional credit reports or credit scores.  That report concluded that the current credit reporting system is precluding certain populations from accessing credit and taking advantage of other economic opportunities.  While it did not use the term “disparate impact,” the report had fair lending implications for both providers and users of credit reports and credit scores.

The 2015 report was followed by a blog post in December 2016 in which the CFPB announced that it had released a brief, “Who are the credit invisibles?,” that described the 2015 report’s most significant findings and contained a checklist of action items for consumers who were new to credit or seeking to rebuild their credit history.  Among the 2015 report’s findings highlighted in the brief were that consumers in low-income neighborhoods are more likely to have no credit history with one of the nationwide consumer reporting agencies or an unscorable credit file and that Black and Hispanic consumers are more likely to have no credit history with one of the nationwide consumer reporting agencies and have unscored credit records than White or Asian consumers.

The CFPB’s key findings in the new report based on the sample data used by the CFPB include:

  • Almost 80 percent of consumers who transitioned out of credit invisibility did so before age 25, with consumers in low- and moderate-income neighborhoods who made this transition doing so at older ages than consumers in middle- or upper-income neighborhoods.
  • Across all age groups and income levels, credit cards triggered the creation of consumer credit records more frequently than any other product with student loans the next most frequent trigger.
  • Consumers in lower-income neighborhoods were more likely than consumers in higher-income neighborhoods to acquire a credit record from non-loan items, such as third-party collection accounts or public records, with almost 90 percent of these non-loan items conveying negative information about the consumer’s creditworthiness.
  • About 15 percent of consumers opened their earliest reported credit account with a co-borrower and the credit records of an additional 9.6 percent of consumers were created when the consumer became an authorized user on someone else’s credit account, thus implying that about 1-in-4 consumers first acquire their credit history from an account for which others were also responsible. The use of co-borrowers and authorized user account status was notably less common in lower-income neighborhoods.
  • The frequency with which credit cards trigger the creation of a credit record has been growing rapidly in recent years, except among consumers younger than 25 as to whom the share of credit records created as the result of a credit card has been declining.  This decline cannot be fully explained by the growth in student loans or the restrictions in the Credit Card Accountability Responsibility and Disclosure Act on issuing credit cards to consumers under the age of 21 and marketing credit cards to college students.

In February 2017, the CFPB issued a request for information (RFI) seeking information about the use of alternative data and modeling techniques in the credit process.  The CFPB indicated that the RFI stemmed from its desire “to encourage responsible innovations that could be implemented in a consumer-friendly way to help serve populations currently underserved by the mainstream credit system.”  In the new report, the CFPB suggests that “the differences in the incidences of credit invisibility between higher- and lower-income neighborhoods may reflect the greater tendency of consumers in the latter to be unbanked” and “would imply that the problems posed by credit invisibility might be mitigated by promoting access to banking services in lower-income communities.”

The CFPB also indicated that the issues it hopes to examine in future research include the challenges facing consumers with unscored credit records and the characteristics of credit records (negative versus positive information) that result in transitioning out of credit invisibility.

The CFPB has issued its February 2017 complaint report that highlights credit reporting complaints.  The report also highlights complaints from consumers in Louisiana and the New Orleans metro areas.

General findings include the following:

  • As of February 1, 2017, the CFPB handled approximately 1,110,100 complaints nationally, including approximately 29,700 complaints in January 2017.
  • Debt collection continued to be the most-complained-about financial product or service in December 2016, representing about 26 percent of complaints submitted.
  • For the first time, student loans replaced mortgages in the “top three” complaint categories with debt collection complaints, together with complaints about credit reporting and student loans, collectively representing about 60 percent of the complaints submitted in January 2017.  This likely reflects the increase in the number of student loan complaints received in January 2017 as compared with December 2016. Complaints about student loans showed the greatest month-over-month increase, increasing 537 percent from December 2016.  Student loans also had the greatest percentage increase based on a three-month average, increasing about 388 percent from the same time last year (November 2015 to January 2016 compared with November 2016 to January 2017).  In February 2016, the CFPB began accepting complaints about federal student loans.  Previously, such complaints were directed to the Department of Education.  As we have noted in blog posts about prior CFPB monthly complaint reports issued beginning in April 2016, rather than reflecting an increase in the number of borrowers making student loan complaints, the increasing percentages represented by student loan complaints received by the CFPB most likely reflects the change in where such complaints are sent.
  • Payday loans showed the greatest percentage decrease based on a three-month average, decreasing about 26 percent from the same time last year (November 2015 to January 2016 compared with November 2016 to January 2017).  Complaints during those periods decreased from 408 complaints in 2015/2016 to 302 complaints in 2016/2017.
  • Georgia, South Dakota, and Mississippi experienced the greatest complaint volume increases from the same time last year  (November 2015 to January 2016 compared with November 2016 to January 2017) with increases of, respectively, 59, 43, and 34 percent.
  • Delaware, New Hampshire, and Hawaii experienced the greatest complaint volume decreases from the same time last year (November 2015 to January 2016 compared with November 2016 to January 2017) with decreases of, respectively, 8, 8, and 4 percent.

Findings regarding credit reporting complaints include the following:

  • The CFPB has handled approximately 185,700 credit reporting complaints.
  • The most common issues identified in complaints involved problems with incorrect information on credit reports and investigations by credit reporting companies.  Consumers complained about the process for disputing information on credit reports, such as difficulties in submitting disputes through phone and mail channels, authentication questions or other barriers to submitting disputes, and problems receiving results of investigations.
  • Consumers complained about the process for blocking and removing information resulting from identity theft and credit inquiries claimed not to have been initiated by the consumer.
  • Many consumer complaints about credit scoring reflect confusion over the variety of scores, scoring factors that  accompany credit score information, and receipt of varying scores from different reporting agencies.

Findings regarding complaints from Louisiana consumers include the following:

  • As of February 1, 2017, approximately 12,400 complaints were submitted by Louisiana consumers of which approximately 4,500 were from New Orleans consumers.
  • Debt collection was the most-complained-about product, representing 34 percent of all complaints submitted by Louisiana consumers, which was higher than the national average rate of 27 percent of all complaints submitted by consumers.
  • Average monthly complaints received from Louisiana consumers increased 31 percent from the same time last year (November 2015 to January 2016 compared with November 2016 to January 2017), higher than the increase of 21 percent nationally.


The CFPB has issued a request for information (RFI) that seeks information about the use of alternative data and modeling techniques in the credit process.  On March 21, 2017 from 12:00 to 1:00 p.m. ET, Ballard Spahr attorneys will hold a webinar: The New Frontier of Alternative Credit Models: Opportunities, Risks and the CFPB’s Request for Information.  A link to register is available here.

According to the CFPB, the RFI stems from the Bureau’s desire “to encourage responsible innovations that could be implemented in a consumer-friendly way to help serve populations currently underserved by the mainstream credit system.”  The CFPB had signaled the likelihood of future action relating to alternative credit data in a May 2015 report, “Data Point: Credit Invisibles,” that reported the results of a research project undertaken by the CFPB to better understand the demographic characteristics of consumers without traditional credit reports or credit scores.  The report, which the RFI cites, concluded that the current credit reporting system is precluding certain populations from accessing credit and taking advantage of other economic opportunities.

In conjunction with the RFI’s issuance, the CFPB held a field hearing on alternative credit data in Charleston, West Virginia at which Director Cordray gave remarks.  (In a break from its prior practice, the CFPB did not publish advance notice of the field hearing on its website.)

In the RFI’s Supplementary Information, the CFPB states that it not only seeks information relating to consumer credit but, “because some of the Bureau’s authorities relate to small business lending,” it “welcomes information about alternative data and modeling techniques in business lending markets as well.”  To that end, for many of the specific questions asked in the RFI on which the CFPB seeks comments, the CFPB asks commenters to describe “any differences in your answers as they pertain to lending to businesses (especially small businesses) rather than consumers.”  (The CFPB notes the ECOA’s coverage of consumer and business credit and that it has begun the process of writing regulations to implement Dodd-Frank Section 1071, which requires data collection and reporting for lending to women-owned, minority-owned, and small businesses.)  Comments on the RFI must be received on or before May 19, 2017.

The Supplementary Information includes a discussion of alternative data and modeling techniques in which the CFPB provides examples of the types of data and modeling techniques that have been labeled “alternative.”  It also discusses prior research by other federal regulators, such as the FTC’s report on big data.  (The CFPB notes that the non-traditional data that might be used to assess borrower creditworthiness could include “big data.”  To address the growing interest in the use of “big data” and “machine learning” by a wide range of businesses, we recently held a webinar, “Big Data and Computer Learning – Lots of Opportunity and Lots of Legal Risk.”)

In the Supplementary Information, the CFPB lists potential consumer benefits and risks it has identified and states that it intends to use the information gleaned from the RFI’s questions “to help maximize the benefits and minimize the risks” from the use of alternative data and modeling techniques.  The RFI contains 20 specific questions (most of which have numerous subsidiary questions) that are divided into four sections: alternative data, alternative modeling techniques, potential benefits and risks to consumers and market participants, and specific statutes and regulations as they pertain to alternative data and modeling techniques.  The CFPB notes that although each question speaks generally about all decisions in the credit process, “answers can differentiate, as appropriate, between uses in marketing, fraud detection and prevention, underwriting, setting or changes in terms (including pricing), servicing, collections, or other relevant aspects of the credit process.”

The CFPB states in the RFI that it not only seeks to understand the benefits and risks stemming from the use of alternative data and modeling techniques, but “also to begin to consider future activity to encourage their responsible use and lower unnecessary barriers, including any unnecessary regulatory burden or uncertainty that impedes such use.”  We hope the CFPB’s issuance of the RFI reflects its recognition of the complexity of the issues involved in the use of alternative data and modeling techniques and the need for it to carefully consider the interests of all stakeholders.