In the coming weeks, the CFPB will issue a series of new rules aimed at curtailing payday, vehicle title, and certain high-cost installment loans that will cut nearly 30 million customers off from critical forms of credit. Even more significant, however, is that it will begin mandating the collection of huge volumes of unnecessary financial information, and in the process expose people who use these products to a potential hack.
Under the new rule, customers applying for a small-dollar loan – the average being a mere $350 – will be required to submit extensive personal financial information in support of their applications. Lenders will determine a customer’s ability to repay the loan, but they will also be required to share this financial information with numerous credit reporting agencies (CRAs) registered with the Bureau. Before the recent Equifax breach, the CFPB boasted that the new rule would prescribe “requirements for furnishing loan information to and obtaining consumer reports from those registered information systems,” as if such reporting benefited consumers.