CFPB Clarifies FCRA’s Express Preemption Provisions

On June 28, 2022, the CFPB issued on its website an interpretive rule (Rule) clarifying that, with limited preemption exceptions, states have flexibility under the Fair Credit Reporting Act (FCRA) to pass laws involving consumer reporting to reflect emerging problems affecting the states’ local economies and citizens.  FCRA contains requirements regarding the creation of, use of, and certain consumer rights in connection with consumer reports.  Several states have passed their own versions of FCRA, some of which provide consumer protections that exceed those provided in the federal statute.  The Rule is intended to clarify when, under the existing provisions of FCRA, such state laws are preempted. 

First, the CFPB notes that “State laws that are not ‘inconsistent’ with the FCRA—including state laws that are more protective of consumers than the FCRA—are generally not preempted.”  Such states laws are not the focus of the Rule.  Instead, and at least partly in response to recent challenges to certain State laws, the Rule seeks to address the FCRA language providing that certain categories of State laws are expressly preempted.  In short, the CFPB clarified that the “FCRA’s express preemption provisions have a narrow and targeted scope.”  For example, the CFPB interprets the FCRA to generally allow a state to pass a law prohibiting a consumer reporting agency from including information “about a consumer’s eviction, rental arrears, or arrests on a consumer report.” 

As described in a press release accompanying the issuance of the Rule, the Rule “is part of the CFPB’s work to support the role of states to protect consumers and honest businesses,” and follows a May interpretive rule clarifying States’ authorities to pursue lawbreaking companies and individuals under the Consumer Financial Protection Act.  WBK wrote about that May interpretive rule here.