Interim CFPB director Mick Mulvaney announced that the watchdog agency put a freeze on its personal data collection, citing cybersecurity concerns as the main reason. This is reportedly part of Mulvaney’s plan to improve data security at the CFPB.
President Trump appointed Mulvaney to serve as interim director of the CFPB after former director Richard Cordray resigned last month. This move was controversial as Mulvaney has been a frequent critic of the agency, particularly their work to collect personal consumer data and consumer complaints.
And while CFPB opponents have made the case that this type of data collection could lead to privacy and security risks, its proponents argue that collecting this data is what allowed the agency to root out misconduct and discrimination among financial institutions.
According to Mulvaney, the decision to freeze the data collection was mostly based on two reports that were released earlier in the year. The reports highlighted problems with the CFPB’s data security practices and recommended the agency enforce stricter guidelines on what sensitive consumer information employees are able to access.
Mulvaney stated that he is very concerned with data security, adding that he thinks the CFPB should enforce a stricter data-security program of their own “…before we start expecting that from people who we oversee out in the industry.”
In spite of a temporary hiring freeze, Mulvaney also announced that he will be bringing several political appointees on to work with the agency. Republican congressional lawyer Brian Johnson, who previously worked under Representative Jeb Hensarling, is the first to be brought onto the agency as a senior adviser.
So how could this data collection freeze impact consumers? One of the biggest areas of concern may be the freezing of the consumer complaint database.
The CFPB first started collecting consumer complaints in July 2011 and since then, the agency has collected over 900,000 complaints against financial companies. And once a complaint is filed, a company has 15 days to respond before the complaints are published in a public database.
This database has played a crucial role in helping the agency spot fraudulent practices. It is also helpful for consumers who have important financial decisions to make. And it gives anyone who has an issue with their bank, private student loan, student loan servicer, or mortgage lender a place to go to voice those concerns. By freezing this tool, consumers could lose out on an important means for standing up to unfair lending practices.
Going forward, it remains to be seen what is in store for the CFPB under Mulvaney’s leadership. However, it seems likely that there will be a significant scaling back on financial regulations which could mean fewer protections for the average consumer.
Author: Dave Rathmanner
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