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Downshifting a Data Request

Downshifting a Data Request

Earlier this year the CFPB proposed a new data collection project, with the Bureau indicating it would like to collect loan-level information on just about every auto loan in the U.S. The Bureau hasn’t said why it needs this data or what it would do with it. In order to proceed, however, the CFPB needs to follow the Paperwork Reduction Act and get clearance from the Office of Management and Budget (OMB).

The first step in that approval process is asking for comment. This week, AFSA joined with the American Bankers Association, America’s Credit Unions, Consumer Bankers Association, and U.S. Chamber of Commerce in a letter urging the CFPB to abandon the new information collection because: (1) the CFPB lacks the legal authority to collect the information; and (2) the CFPB grossly underestimates the burden of the information’s collection. The CFPB estimated that it would take financial institutions approximately 20 minutes to collect and report over 120 data points on each loan they originated or serviced. In reality it would take hundreds, if not over a thousand, hours.

Eighteen GOP members of the Financial Services Committee have expressed similar concerns, sending their own letter to CFPB Director Rohit Chopra requesting that the Bureau not proceed on its auto collection data proposal. The letter was led by Small Business Chairman Roger Williams (R-TX), a car dealer by trade, and signatories, which AFSA helped to garner, including Financial Services Vice-Chair French Hill (R-AR) and Financial Institutions Subcommittee Chair Andy Barr (R-KY).

As the letter notes, the CFPB is proposing to collect data from auto finance companies yet “has failed to justify why this overreaching data collection is necessary.” The information sought is unduly burdensome to businesses and “ignores Congressional intent … relating to the ‘exclusion of auto dealers.’”

The letter also raises valid, serious concerns about the types of personally identifiable consumer information the agency is demanding, particularly since the CFPB has not only been unable in the past to prevent data breaches but has been less than transparent about its data protection failings. In fact, months after disclosing the data breach, the agency was forced to admit potentially affected consumers had yet to be notified.

We also note an additional concern about the data project: past CFPB research and reports on the vehicle finance market have revealed not only a bias against the industry, but a lack of nuanced understanding about the vehicle finance process and the choices that consumers have for their vehicle-purchase needs. Serious and constructive analysis and takeaways that inform both industry operations and oversight can be crucial in shaping a pro-consumer marketplace, and AFSA supports such efforts, but when it comes to the CFPB’s latest data project, its upcoming initial output will go a long way to either confirm congressional concerns or create new opportunities for a constructive regulatory process.

March 27th, 2024

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