CFPB Finalizes Rule to Enhance Consumer Financial Data Rights

On October 22, 2024, the Consumer Financial Protection Bureau (CFPB) finalized a groundbreaking rule that will enhance consumer rights, privacy, and security over personal financial data. This new regulation mandates that financial institutions, credit card issuers, and other financial providers must unlock and transfer an individual’s personal financial data to another provider at the consumer’s request, free of charge.

Key Benefits for Consumers:

• Greater Choice and Competition: Consumers can now easily switch to providers offering superior rates and services, helping to lower loan prices and improve customer service across payments, credit, and banking markets.
• Enhanced Data Access: The rule ensures consumers can access and share data related to bank accounts, credit cards, mobile wallets, payment apps, and other financial products.
• Privacy Protections: Strong privacy measures are in place to ensure data is used only for authorized purposes, moving the industry away from risky practices like “screen scraping.”

CFPB Director Rohit Chopra stated, “Too many Americans are stuck in financial products with lousy rates and service. Today’s action will give people more power to get better rates and service on bank accounts, credit cards, and more.”

Implementation Timeline:

• Phased Compliance: Larger providers must comply by April 1, 2026, while smaller institutions have until April 1, 2030. Certain small banks and credit unions are exempt from this rule.

Consumer Empowerment:

• Switch Providers Easily: Transfer bank data to another institution without fees or hurdles.
• Shop for Better Rates: Comparison shop for better rates on deposits and loans, benefiting even those with shorter credit histories.
• Secure Payments: Securely share payment information, enabling options like “pay-by-bank” and increasing competition in payment markets.

Data Protection Measures:

• Ban on Bait-and-Switch: Third parties can only use data for the product requested by the consumer.
• Revocation and Deletion Rights: Consumers can revoke access and request data deletion easily, with access maintained for no more than one year without reauthorization.

For more information, visit the CFPB website.

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