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The U.S. Consumer Financial Protection Bureau Is Collecting Massive Amounts Of Your Personal Financial Information

Crapo Op-Ed in Forbes

Not a day goes by without news reports on how large corporate entities and the government are collecting ever-increasing amounts of personal information about us.  While consumers voluntarily give away personal information to various websites in exchange for their services, more worrisome is the collection of personal information without our knowledge or consent.  When our government is doing the collecting, those concerns intensify.  We ought to pause and ask what the appropriate place for the government is in this brave new "big data" world.

Concerns about privacy and protection of personal information are not new in our society.  Future Supreme Court Justice Louis Brandeis and Samuel Warren's seminal 1890 article, The Right to Privacy, attempted to address invasion of privacy posed by the emerging media of the day.  What is new is the vast amount of data that the government is collecting about us, and the ease with which it is doing so.

Ironically, an agency that Congress created to protect consumers has been collecting an unprecedented amount of personal information about the very consumers it was tasked with protecting.  Since its creation, the Consumer Financial Protection Bureau has collected information on millions of consumers on products ranging from automobile sales, consumer credit reports, credit cards, credit scores, payday loans, mortgages, student loans and overdraft fees.  The Bureau even teamed up with the Federal Housing Finance Agency to create and maintain a national mortgage database containing borrowers' social security numbers and personalized information about religion, education and military records, languages spoken, age of children at home and major life events.  Only after I demanded an explanation of what exactly a borrower's religion has to do with his or her mortgage did the agencies agree to cease collecting that information.

After repeated attempts to get specific information from the Bureau failed, I requested an official review of CFPB's data collection by the Government Accountability Office (GAO).  In a report released this week, the GAO found that not only is the CFPB collecting massive amounts of personal financial information on Americans, but its lack of enhanced privacy and data security measures raises serious concerns.

The report acknowledged CFPB's ongoing collection of up to 600 million credit cards, 11 million credit reports, 700,000 auto sales, 10.7 million consumers, co-signers and borrowers, 29 million active mortgages, and 5.5 million private student loans.  The Bureau defends this massive collection of personal financial transactions by saying it needs it in order to protect consumers.  This pretext for its big data grab is inappropriate at best and will only exacerbate a race to the bottom, with the consumer on the losing end of this dangerous equation.

In light of the hundreds of millions of consumer accounts that have recently been affected by massive data breaches at large retailers, we cannot underestimate the intrinsic vulnerability in collecting and storing our personal financial information, whether it is done by the government or corporate entities.  We require financial institutions to implement tight cybersecurity measures at exorbitant costs, yet I consistently hear from many federal departments' Inspectors General that the agencies do not live up to these exacting standards.  In the name of consumer protection, we require financial institutions to disclose what type of personal information they are collecting and how that information is being shared.  However, the government can collect the same information without any disclosure and under a veil of consumer protection, as the CFPB does on a monthly basis with impunity.

We have learned from the recent NSA and IRS scandals what happens when government agencies cross the line and watch citizens, rather than watching out for them.  There is without a doubt a trust deficit in government today, and this federal agency is using unchecked power and the heavy hand of the federal government to gather data on the spending habits of hundreds of millions of Americans.  We must not allow the federal government to further encroach on our personal privacy.  Increased transparency, accountability and privacy protections will only increase, not weaken, consumer protection.