[Federal Register Volume 87, Number 68 (Friday, April 8, 2022)]
[Proposed Rules]
[Pages 20771-20781]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-07528]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 87, No. 68 / Friday, April 8, 2022 / Proposed
Rules
[[Page 20771]]
BUREAU OF CONSUMER FINANCIAL PROTECTION
12 CFR Part 1022
[Docket No. CFPB-2022-0023]
RIN 3170-AB12
Prohibition on Inclusion of Adverse Information in Consumer
Reporting in Cases of Human Trafficking (Regulation V)
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Proposed rule.
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SUMMARY: The Consumer Financial Protection Bureau (Bureau) seeks
comment on regulations implementing amendments to the Fair Credit
Reporting Act (FCRA) that assist consumers who are victims of
trafficking. The proposed rule, which would implement a recent
amendment to the FCRA, would establish a method for a victim of
trafficking to submit documentation to consumer reporting agencies,
including information identifying any adverse item of information about
the consumer that resulted from certain types of human trafficking, and
prohibit the consumer reporting agencies from furnishing a consumer
report containing the adverse item(s) of information. The Bureau is
taking this action as mandated by the National Defense Authorization
Act for Fiscal Year 2022 and to assist consumers who are victims of
trafficking in building or rebuilding financial stability and personal
independence.
DATES: Comments on the proposed rule must be received on or before May
9, 2022.
ADDRESSES: You may submit comments, identified by Docket No. CFPB-2022-
0023 or RIN 3170-AB12, by any of the following methods:
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments.
Email: [email protected]. Include Docket
No. CFPB-2022-0023 or RIN 3170-AB12 in the subject line of the message.
Mail/Hand Delivery/Courier: Comment Intake--FCRA
Trafficking, Bureau of Consumer Financial Protection, 1700 G Street NW,
Washington, DC 20552. Please note that due to circumstances associated
with the COVID-19 pandemic, the Bureau discourages the submission of
comments by hand delivery, mail, or courier.
Instructions: The Bureau encourages the early submission of
comments. All submissions should include the agency name and docket
number or Regulatory Information Number (RIN) for this rulemaking.
Because paper mail in the Washington, DC area and at the Bureau is
subject to delay, commenters are encouraged to submit comments
electronically. In general, comments received will be posted without
change to https://www.regulations.gov. In addition, once the Bureau's
headquarters reopens, comments will be available for public inspection
and copying at 1700 G Street NW, Washington, DC 20552, on official
business days between the hours of 10 a.m. and 5 p.m. Eastern Time. At
that time, you can make an appointment to inspect the documents by
telephoning 202-435-7275.
All comments, including attachments and other supporting materials,
will become part of the public record and subject to public disclosure.
Proprietary information or sensitive personal information, such as
account numbers or Social Security numbers, or names of other
individuals, should not be included. Comments will not be edited to
remove any identifying or contact information.
FOR FURTHER INFORMATION CONTACT: Daniel Tingley, Counsel, or Lanique
Eubanks, Senior Counsel, Office of Regulations, at 202-435-7700 or
https://reginquiries.consumerfinance.gov/. If you require this document
in an alternative electronic format, please contact
[email protected].
SUPPLEMENTARY INFORMATION:
I. Summary of the Proposed Rule
The Bureau is proposing several amendments to Regulation V to
implement new section 605C of the Fair Credit Reporting Act (FCRA),\1\
added by the National Defense Authorization Act for Fiscal Year 2022
(2022 NDAA).\2\ In brief, section 605C provides that a consumer
reporting agency may not furnish a consumer report containing any
adverse item of information concerning a consumer that resulted from a
severe form of trafficking in persons or sex trafficking if the
consumer has provided trafficking documentation to the consumer
reporting agency.\3\ Under section 605C, the Bureau is required to
issue implementing regulations within 180 days of the enactment of the
2022 NDAA. Section 605C is effective 30 days after the Bureau issues
its final implementing regulations.
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\1\ Fair Credit Reporting Act, 15 U.S.C. 1681 et seq.
\2\ National Defense Authorization Act for Fiscal Year 2022
(2022 NDAA), Public Law 117-81, section 6102, 135 Stat. 2383-84
(2021) (to be codified at 15 U.S.C. 1681c-3), https://www.congress.gov/117/plaws/publ81/PLAW-117publ81.pdf (last visited
Mar. 28, 2022). The sponsors of this section of the 2022 NDAA and
some advocates refer to this law as the ``Debt Bondage Repair Act,''
in reference to H.R. 2332 (introduced in the 117th Cong. on Apr. 1,
2021).
\3\ For purposes of this rule, the terms ``severe forms of
trafficking in persons'' and ``sex trafficking'' will be referred to
individually (as defined in the Section-by-Section Analysis of
section 1022.142(b)) or collectively as ``trafficking.''
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The Bureau is proposing to amend Regulation V as follows:
Create a new section in subpart O, the subpart on
miscellaneous duties of consumer reporting agencies, to add the
provisions implementing section 605C of the FCRA;
Apply the proposed regulations to any ``consumer reporting
agency'' as defined in section 603(f) of the FCRA, namely nationwide
consumer reporting agencies, nationwide specialty consumer reporting
agencies, and all other consumer reporting agencies;
Define terms including, in particular, ``trafficking
documentation,'' ``severe forms of trafficking in persons,'' ``sex
trafficking,'' and ``victim of trafficking''; and
Establish procedures for implementation of the new
prohibition, including establishing how affected consumers should
submit the required documentation to consumer reporting agencies and
recordkeeping requirements to ensure compliance.
[[Page 20772]]
II. Background
A. Introduction
According to the United States Department of State, in the United
States human traffickers compel victims to engage in commercial sex and
to work in legal and non-legal industries and sectors, including, for
example, agriculture, janitorial services, construction, landscaping,
restaurants, factories, child care, care for persons with disabilities,
domestic work, salon services, massage parlors, peddling and begging,
and drug smuggling and distribution.\4\ As the State Department has
noted, it is difficult to find reliable statistics related to human
trafficking for a number of reasons, including the hidden nature of the
crime and barriers to identifying victims of trafficking and sharing
information about them.\5\
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\4\ U.S. Dep't of State, About Human Trafficking, https://www.state.gov/humantrafficking-about-human-trafficking (last visited
Mar. 16, 2022).
\5\ Id.
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U.S. Government efforts to respond to the needs of victims of
trafficking recognize that victims need both immediate and longer-term
services, including services to improve financial stability to support
their long-term independence.\6\ Accurate consumer reporting that does
not disadvantage victims \7\ with adverse information resulting from
them having been trafficked is critical to the ability of victims to be
able to take basic steps such as obtaining housing and employment and
to move toward greater financial stability and independence.
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\6\ Coordination Collaboration Capacity, Federal Strategic
Action Plan on Services for Victims of Human Trafficking in the
United States 2013-2017, at 9, (Jan. 2014), https://ovc.ojp.gov/sites/g/files/xyckuh226/files/media/document/FederalHumanTraffickingStrategicPlan.pdf.
\7\ The Bureau recognizes that some individuals and advocates
prefer the term ``survivor'' to ``victim.'' As the State Department
explained, ``[b]oth terms are important and have different
implications when used in the context of victim advocacy and service
provision. For example, the term `victim' has legal implications
within the criminal justice process and refers to an individual who
suffered harm as a result of criminal conduct. The laws that give
individuals particular rights and legal standing within the criminal
justice system use the term `victim.' . . . `Survivor' is a term
used widely in service providing organizations to recognize the
strength and courage it takes to overcome victimization.'' See Off.
for Victims of Crime, Training & Tech. Assistance Ctr., U.S. Dep't
of Justice, Human Trafficking Task Force e-Guide, https://www.ovcttac.gov/taskforceguide/eguide/1-understanding-human-trafficking/13-victim-centered-approach/ (last visited Mar. 21,
2022). In this proposed rule, we have used the term ``victim''
because that is the wording of section 6102 of the 2022 NDAA.
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B. The Fair Credit Reporting Act
The FCRA, enacted in 1970 and significantly amended in 1996, 2003,
2010, and 2018, regulates consumer reporting. It was enacted to protect
consumers by preventing the transmission of inaccurate information in
consumer reports and establishing confidential and responsible credit
reporting practices.\8\ The FCRA's statutory scheme was designed to
ensure that consumer reporting agencies adopt reasonable procedures for
meeting the needs of commerce in a manner which is fair and equitable
to consumers and protects the confidentiality, accuracy, relevancy, and
proper utilization of consumer information.\9\
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\8\ Guimond v. Trans Union Credit Info. Co., 45 F.3d 1329, 1333
(9th Cir. 1995).
\9\ 15 U.S.C. 1681(b).
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Together with its implementing regulation, Regulation V,\10\ the
FCRA creates a regulatory framework for furnishing, using, and
disclosing information in reports associated with credit, insurance,
employment, and other decisions made about consumers. In doing so, the
FCRA and Regulation V impose obligations on entities that qualify as
``consumer reporting agencies.'' They also impose obligations on those
who use consumer report information or furnish information to consumer
reporting agencies (furnishers).
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\10\ 12 CFR part 1022.
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C. The National Defense Authorization Act for Fiscal Year 2022
Section 6102 of the 2022 NDAA amended the FCRA by inserting a new
section 605C, which provides at section 605C(b) that a consumer
reporting agency may not furnish a consumer report containing any
adverse item of information concerning a consumer that resulted from a
severe form of trafficking in persons or sex trafficking if the
consumer has provided trafficking documentation to the consumer
reporting agency. As described in more detail in the Section-by-Section
Analysis parts of this proposed rule, section 605C(a) provides
statutory definitions for a number of the terms used therein. Section
605C(c)(1) directs the Bureau to issue implementing rules within 180
days of enactment, and section 605C(c)(2) mandates that the rules must
establish a method by which consumers must submit trafficking
documentation to consumer reporting agencies.
III. Legal Authority
The Bureau is issuing this proposal pursuant to its authority under
the FCRA, the Dodd-Frank Wall Street Reform and Consumer Protection Act
(Dodd-Frank Act),\11\ and section 6102 of the 2022 NDAA.
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\11\ Dodd-Frank Wall Street Reform and Consumer Protection Act
(Dodd-Frank Act), Public Law 111-203, 124 Stat. 1376 (2010).
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A. Dodd-Frank Act Section 1022(b) and the FCRA
Section 1022(b)(1) of the Dodd-Frank Act authorizes the Bureau to
prescribe rules as may be necessary or appropriate to enable the Bureau
to administer and carry out the purposes and objectives of the Federal
consumer financial laws, and to prevent evasions thereof.\12\ Effective
July 21, 2011, section 1061 of the Dodd-Frank Act transferred to the
Bureau the rulemaking and certain other authorities of the Federal
Trade Commission (FTC) and the prudential banking regulators (i.e., the
Board of Governors of the Federal Reserve System (FRB), the Federal
Deposit Insurance Corporation (FDIC), the National Credit Union
Administration (NCUA), and the Office of the Comptroller of the
Currency (OCC)) relating to specific ``enumerated consumer laws''
listed in the Dodd-Frank Act, including most rulemaking authority under
the FCRA.\13\ Likewise, section 1088 of the Dodd-Frank Act made
conforming amendments to the FCRA, transferring rulemaking authority
under much of the FCRA to the Bureau.\14\ As amended by the Dodd-Frank
Act, section 621(e) of the FCRA authorizes the Bureau to issue
regulations as may be necessary or appropriate to administer and carry
out the purposes and objectives of the FCRA, and to prevent evasions
thereof or to facilitate compliance therewith.\15\ The Bureau is
issuing this proposed rule pursuant to its authority under section
1022(b)(1) of the Dodd-Frank Act and section 621(e) of the FCRA.
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\12\ Dodd-Frank Act section 1022(b)(1), 124 Stat. 1980.
\13\ Dodd-Frank Act section 1002(12)(F), 124 Stat. 1957. Section
1002(12)(F) of the Dodd-Frank Act designates most of the FCRA as an
``enumerated consumer law.''
\14\ Dodd-Frank Act section 1061, 124 Stat. 2037.
\15\ Dodd-Frank Act section 1088(a)(10)(E), 124 Stat. 2090
(codified at 15 U.S.C. 1681s(e)).
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B. The National Defense Authorization Act for Fiscal Year 2022
Section 6102(a) of the 2022 NDAA directs the Bureau to issue a rule
implementing the new section 605C of the FCRA. Section 6102(c) provides
that the rule issued to implement section 605C shall be limited to
preventing a consumer reporting agency from furnishing a consumer
report containing any adverse item of information about a consumer (as
such terms are defined, respectively, in section 603 of the FCRA
[[Page 20773]]
(15 U.S.C. 1681a)) that resulted from trafficking.
IV. Section-by-Section Analysis
Section 1022.142 Prohibition on Inclusion of Adverse Information in
Consumer Reporting in Cases of Human Trafficking
142(a) Scope
The Bureau is proposing to apply the requirement to prohibit the
furnishing of adverse items of information about victims of trafficking
to any ``consumer reporting agency'' as defined in section 603(f), as
directed by section 6102(c) of the 2022 NDAA. Thus, consistent with
section 603(f) of the FCRA, the Bureau is proposing to define
``consumer reporting agency'' to apply to all consumer reporting
agencies. This means that the nationwide consumer reporting agencies,
nationwide specialty consumer reporting agencies, and all other
consumer reporting agencies such as those focused on employment
screening, tenant screening, check and bank screening, personal
property insurance, medical, low-income and subprime, supplementary
reports, utilities, retail, and gaming would be covered.\16\
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\16\ A list of many self-identified consumer reporting companies
is available on the Bureau's website at https://www.consumerfinance.gov/consumer-tools/credit-reports-and-scores/consumer-reporting-companies/companies-list/(last visited Mar. 21,
2022).
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142(b) Definitions
142(b)(1) Appropriate Proof of Identity
Proposed section 1022.142(b)(1) defines the term ``appropriate
proof of identity'' as meaning proof of identity that meets the
requirements in section 1022.123. This section, which concerns proof of
identify for consumers regarding identity theft, provides that consumer
reporting agencies must develop and implement reasonable requirements
specifying what information consumers must provide to constitute proof
of identity. The requirements of proposed section 1022.142(b)(1) are
not prescriptive; the Bureau is proposing this approach in light of the
challenges commonly faced by victims of trafficking. For instance,
certain victims may have been displaced, may live at an address not
reported to consumer reporting agencies, or may lack access to
information or documentation commonly used for proof of identity. While
a consumer reporting agency would need to take reasonable steps to
ensure that the required information in the context of human
trafficking is sufficient to enable it to match the consumer with a
credit file and commensurate with an identifiable risk of harm arising
from misidentifying the consumer, the requirements to establish proof
of identity should be sensitive to the particular needs of victims of
trafficking. For example, consumer reporting agencies could include
methods of validation of a person's identity such as the consumer's
ability to answer questions to which only the consumer might be
expected to know the answer.
142(b)(2) Consumer Report
Proposed section 1022.142(b)(2) defines the term ``consumer
report'' to have the same meaning as that provided in section 603(d) of
the FCRA. The use of this definition is directed by section 6102(c) of
the 2022 NDAA (which provides that the Bureau's rule shall be limited
to preventing a consumer reporting agency from furnishing a consumer
report containing any adverse item of information about a consumer that
resulted from trafficking as the terms used in that provision are
defined in section 603 of the FCRA).
142(b)(3) Consumer Reporting Agency
Proposed section 1022.142(b)(3) defines ``consumer reporting
agency'' to have the meaning provided in section 603(f) of the FCRA.
The use of this definition is directed by section 6102(c) of the 2022
NDAA.
142(b)(4) Severe Forms of Trafficking in Persons
Section 605C(a)(2) provides that the term ``severe forms of
trafficking in persons'' has the meaning given in section 103 of the
Trafficking Victims Protection Act of 2000 (22 U.S.C. 7102). Proposed
section 1022.142(b)(4) accordingly adopts the definition set forth in
that statute, which defines ``severe forms of trafficking in persons''
as:
(i) Sex trafficking in which a commercial sex act is induced by
force, fraud, or coercion, or in which the person induced to perform
such act has not attained 18 years of age; or
(ii) The recruitment, harboring, transportation, provision, or
obtaining of a person for labor or services, through the use of force,
fraud, or coercion for the purpose of subjection to involuntary
servitude, peonage, debt bondage, or slavery.
142(b)(5) Sex Trafficking
Section 605C(a)(2) provides that the term ``sex trafficking'' has
the meaning given in section 103 of the Trafficking Victims Protection
Act of 2000 (22 U.S.C. 7102). Section 103 of the Trafficking Victims
Protection Act of 2000 was amended by section 108 of the Justice for
Victims of Trafficking Act of 2015, 22 U.S.C. 7102(12). Proposed
section 1022.142(b)(5) adopts the definition in section 103 as amended
in 2015. Under that definition, the term means the recruitment,
harboring, transportation, provision, obtaining, patronizing, or
soliciting of a person for the purpose of a commercial sex act.
142(b)(6) Trafficking Documentation
142(b)(6)(i)(A) and (B)
Section 605C(a)(1) defines ``trafficking documentation'' as
documentation of a determination that a consumer is a victim of
trafficking, made by a Federal, State, or Tribal governmental entity,
or by a court of competent jurisdiction; and documentation that
identifies items of adverse information that should not be furnished by
a consumer reporting agency because the items resulted from a severe
form of trafficking in persons or sex trafficking of which the a
consumer is the victim. The Bureau is proposing to incorporate this
statutory definition with certain clarifying interpretations regarding
documentation identifying a consumer who is a victim of trafficking
involving a ``court of a competent jurisdiction,'' to clarify that the
documentation may consist of one or more documents as long as the
collective documentation satisfies the definition. As discussed in
detail below, the proposed rule would define ``trafficking
documentation'' to include documents filed in a court of competent
jurisdiction indicating that a consumer is a victim of trafficking.
As provided above, the proposed definition of ``trafficking
documentation'' applies to a ``Federal governmental entity.'' In
drafting the proposed rule, the Bureau sought information from other
Federal agencies and consumer and industry groups about the types of
documentation issued by various governmental entities that consumers
may be able to provide to consumer reporting agencies as trafficking
documentation.\17\ The Bureau found that documentation
[[Page 20774]]
directly identifying a person as a victim of trafficking is scarce and
is primarily limited to foreign-born persons.\18\ The Bureau has also
learned that victims of trafficking are often not identified and thus
many victims will not have documentation determining that they are a
victim of trafficking. One reason victims are not identified is because
persons in the best position to identify people who may be victims of
trafficking are not properly trained to do so.\19\ Another possible
reason may be because some victims do not self-identify as a victim of
trafficking even if they meet the definition.\20\ To the extent a
person self-identifies as a victim of trafficking (or is so identified
by others such as health care or social service providers, law
enforcement officials, or judges), the victim's names, addresses, phone
numbers, and any other identifying information are often protected for
confidentiality and privacy reasons.
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\17\ For purposes of discussing the documentation requirements
and options identifying victims of trafficking, the Bureau held
meetings with: (1) Bureau of Indian Affairs (BIA); (2) Department of
Health and Human Services (HHS): Office of Trafficking in Persons
(OTIP); (3) Department of Homeland Security (DHS): Center for
Countering Human Trafficking; (4) Department of Justice: Money
Laundering and Asset Forfeiture Section, Office for Victims of Crime
(OVC), Human Trafficking Prosecution Unit, Executive Office of the
United States Attorneys; and the (5) Federal Trade Commission. The
Bureau separately held meetings with industry and consumer advocacy
groups for input on section 6102 of NDAA.
\18\ For example, HHS issues certification letters to foreign
national adults who have experienced a severe form of trafficking in
persons after receiving notification that DHS has granted the person
a continued presence, a T visa, or that a bona fide T visa
application has not been denied. This certification letter provides
that foreign national adult victims of trafficking are eligible for
certain Federal and state benefits (health insurance, housing, food
assistance, cash assistance, Federal student financial aid).
Whereas, U.S. citizens and lawful permanent residents do not need a
Certification Letter to access services and benefits available to
victims of trafficking and such as a letter identifying persons as
victims of trafficking is generally not provided to U.S. citizens or
permanent residents. This information is available at https://www.acf.hhs.gov/otip/victim-assistance/certification (last visited
Mar. 2, 2022).
\19\ Off. for Victims of Crime, U.S. Dep't of Justice, Faces of
Human Trafficking Video 2: An Introduction to Sex Trafficking,
YouTube (Jan. 15, 2016) https://youtu.be/JygGZH0cGV4.
\20\ Id.
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The Bureau is aware of programs in which government agencies grant
money to certain organizations to assist victims of trafficking.\21\
For instance, the Department of Justice's Office for Victims of Crime
(OVC) is the largest Federal funder of services for human trafficking
victims in the United States.\22\ The Bureau understands this office
does not make or document determinations as to who is a victim of
trafficking. However, grantees that are non-governmental organizations
who receive funding from the OVC to provide trafficking services to
clients do make determinations that individuals are victims of
trafficking, even when the person does not self-identify as a
victim.\23\ The Bureau anticipates that these non-governmental
organizations may be able to provide documentation that would support a
determination that an individual is a victim of trafficking comparable
to the documentation that might be available from governmental sources.
The Bureau is interested in comments about whether and how such non-
governmental sources of information might be considered in making a
determination under section 605C. For example, might entities that
receive funding from a governmental entity, and are subject to the
terms and conditions of a government program, provide documentation in
the form of a determination identifying a person as a victim of
trafficking that would satisfy section 605C(a)(1)(A)? Could an
attestation or documentation submitted to a Federal, State, or Tribal
governmental entity by a person who self-identifies as a victim of
trafficking, or by another person or entity acting on that person's
behalf, constitute a documented determination under section
605C(a)(1)(A)?
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\21\ A map and list of OVC-funded human trafficking services and
task forces is available on OVC's website at https://ovc.ojp.gov/program/human-trafficking/map. (last visited Mar. 21, 2022). HHS
also provides funding to various organizations offering trafficking
assistance to victims. A list of the grantees is available at
https://www.acf.hhs.gov/otip/grants (last visited Mar. 21, 2022).
\22\ Off. for Victims of Crime, U.S. Dep't of Justice, Matrix of
OVC-Funded Human Trafficking Services Grantees and Task Forces,
https://ovc.ojp.gov/matrix-ovc-funded-human-trafficking-services-grantees-and-task-forces (last visited Mar. 14, 2022).
\23\ Off. for Victims of Crime, U.S. Dept of Justice, OVC Human
Trafficking Program FAQs, at comment 33 ``Can I provide services to
a client who does not self-identify as a victim of human
trafficking?'', https://ovc.ojp.gov/program/human-trafficking/ovc-human-trafficking-program-faqs (last visited Mar. 16, 2022).
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The Bureau is proposing to treat documentation of a determination
that a consumer is a victim of trafficking by a ``State governmental
entity'' as including documentation created at both the state and local
level. Local law enforcement, as part of a local government, may have
documentation of a determination identifying victims of trafficking,
including but not limited to items in a police report. The Bureau
understands that there are Federal and State victims' rights acts in
addition to Tribal codes that depend on a determination that a victim
has been identified as such, including by Federal, State, Tribal, or
local jurisdictions.\24\ In fact, some state laws explicitly
contemplate local entities making this determination for sex
trafficking victims which triggers various rights for the victim and
obligations for the government under State and Federal law.\25\ While
sometimes documentation determining that a person is a victim may be
shared with State, Federal, or Tribal governmental entities, it is
likely that sometimes it is not, and that as a result some victims of
trafficking would not be able to take steps under section 605C to
prohibit the furnishing by consumer reporting agencies of adverse
information about them that results from their having been trafficked
under too narrow a definition. For these reasons, the Bureau is
proposing to include local governmental entities, such as local law
enforcement, as entities that may make determinations of someone's
status as a victim under state law. The Bureau is concerned that a
narrower definition could substantially limit the availability of
documentation for victims of trafficking to submit to consumer
reporting agencies. By proposing to interpret documentation of a
determination that a consumer is a victim of trafficking by a ``State
governmental entity'' as discussed above, the Bureau is making clear
that trafficking documentation consumers are to use will prevent
consumer reporting agencies from furnishing consumer reports containing
adverse items of information about a consumer that resulted from
trafficking. This provision of the rule is also supported by the
Bureau's regulatory authority under section 621(e) of the FCRA, which
authorizes the Bureau to prescribe regulations that promote accuracy
and fairness in credit reporting, and on the general rulemaking
authority granted the Bureau under section 1022(b)(1) of the Dodd-Frank
Act. Therefore, the Bureau is proposing that documentation generated by
both statewide and local entities should be understood as having been
generated by a ``State governmental entity'' for the purposes of this
rule.
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\24\ See, e.g., Victims' Rights & Restitution Act of 1990, 42
U.S.C. 10607; Crime Victims' Rights Act, 18 U.S.C. 3771. In these
Federal statutes and in some state laws, victims' rights attach
during an investigation (and independent of trial) and therefore
rely on a law-enforcement determination, which is quite often made
by a local governmental entity.
\25\ See, e.g., 23 Pa. Cons. Stat. Sec. 5702(a) (requiring
county agencies to report to law enforcement children whom they
``identif[y] as being a sex trafficking victim'' within 24 hours);
Va. Code Ann. Sec. 9.1-116.5 (creating a statewide Sex Trafficking
Response Coordinator who is responsible for ``creat[ing] a statewide
plan for local and state agencies to identify and respond to victims
of sex trafficking'').
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The Bureau is soliciting comments on whether it should interpret
the phrase ``a determination that a consumer is a victim of trafficking
made by a Federal, State, or Tribal governmental entity'' to mean any
determination, including those made by local government officials,
where a Federal, State or Tribal governmental entity could reasonably
be construed as making a determination
[[Page 20775]]
that a consumer is a victim of trafficking. For example, determinations
made by local governments, including local law enforcement, may qualify
a trafficking victim to avail themselves of Federal, State or Tribal
victims' rights laws. The Bureau is also interested in comments
concerning the nature of information on trafficking in the possession
of local governments, the extent to which such information is or might
usefully be shared with Federal, State, and Tribal governmental
entities, and the sort of documentation generated by these governmental
entities.
The Bureau is proposing to include two categories of documentation
involving a ``court of competent jurisdiction'' in the definition of
``trafficking documentation.'' The first category of documents
concerning a ``court of competent jurisdiction,'' is documentation, in
the form of a determination, that the consumer is a victim of
trafficking made by a court of competent jurisdiction.\26\ The second
category is documentation consisting of documents filed in a court of
competent jurisdiction indicating that a consumer is a victim of
trafficking.\27\ The Bureau is also interested in comments on whether
it should clarify in the regulation what documents filed in a court of
competent jurisdiction indicating that a consumer is a victim of
trafficking means. For example, can or should a filing in a court or a
court opinion in which a consumer's status as a victim of trafficking
is an accepted fact, but not the central issue in the case, be
considered a ``determination'' sufficient to satisfy section
605C(a)(1)(A)? Would such an interpretation allow more victims of
trafficking to make use of the procedure created by section 605C?
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\26\ Examples of court documents made by a court of competent
jurisdiction could be a restitution order that provides a victim of
trafficking with restitution after a criminal conviction or a
criminal record relief court order (such as a vacatur, expungement,
or sealing of records) where victims of trafficking may obtain an
order to clear convictions of criminal offenses the victims were
forced to commit.
\27\ An example of a document filed in a court of competent
jurisdiction indicating a consumer is a victim of trafficking could
be where victims of trafficking file suit against their traffickers
where they identify as a victim of trafficking. A prior iteration of
section 6102 of the 2022 NDAA in H.R. 2332 (introduced in the 117th
Cong.) and S. 2040 (introduced in the 117th Cong.) provided that
``trafficking documentation'' included ``documentation of . . . a
determination by a court of competent jurisdiction that a consumer
is a victim of trafficking.'' This language was subsequently changed
and enacted into law to instead read ``documentation of . . . by a
court of competent jurisdiction.''
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As discussed above, the proposed ``trafficking documentation''
definition does not contain a description or example of what is a
``determination that a consumer is a victim of trafficking.''
Furthermore, the Bureau has not identified any standard
``determination'' procedures or forms in use by any governmental
entities or courts concerning human trafficking for persons who are not
foreign national adults (i.e., U.S. citizens or lawful permanent
residents). Accordingly, rather than propose to prescribe a specific
form of determination, the Bureau is proposing to adopt the statutory
definition with the proposed changes discussed in this section above.
This approach affords the greatest flexibility to victims of
trafficking seeking to gather and submit to consumer reporting agencies
the documentation of determinations specified in section 605C(a)(1)(A).
The Bureau may consider issuing interpretations in the future that
provide specific examples to provide clarity on the types of
``determinations'' that establish a consumer is a ``victim of
trafficking.'' The Bureau seeks comment on this issue and solicits
feedback on the types of documents that could serve as a
``determination.''
142(b)(6)(ii)
In addition to specifying that the source of trafficking
documentation be a Federal, State, or Tribal governmental entity or a
court of competent jurisdiction, section 605(C)(a)(1)(B) provides that
``trafficking documentation'' is documentation that identifies items of
adverse information that should not be furnished by a consumer
reporting agency because the items resulted from a severe form of
trafficking in persons or sex trafficking of which the consumer is a
victim. The Bureau has incorporated the statutory provision into
proposed section 1022.142(b)(6)(ii) with a clarification that this
documentation may consist of a statement by the consumer identifying
such information. This part of the definition is significant because it
identifies for victims information that must be provided to consumer
reporting agencies in order to prohibit them from furnishing adverse
information in their consumer report when the information results from
human trafficking.
The Bureau is not proposing to prescribe what an ``adverse item of
information'' in a ``consumer report'' is, because it may vary
depending on the weight each individual user of a consumer report gives
to certain items of information as well as the consumer's individual
circumstances. This information could include the evaluation of factors
enumerated in section 603(d) of the FCRA on consumer reports such as:
Credit worthiness, credit standing, credit capacity, character, general
reputation, personal characteristics, or mode of living. In addition,
victims of trafficking may wish to have items of information blocked
from their consumer report that are the result trafficking because they
do not believe those items accurately reflect them even if the item
does not result in, for example, a lower credit score or less favorable
evaluation by a user. Examples of adverse items of information include
records containing derogatory information, such as payment
delinquencies or defaults, reported to a consumer reporting agency on a
loan or large purchase, records of coerced debt where a loan is taken
out by a trafficking victim under force or threat, records of criminal
arrests and convictions, and records of evictions or non-payment of
rent.
142(b)(7) Victim of Trafficking
Section 605C(a)(3) defines ``victim of trafficking'' as a person
who is a victim of a severe form of trafficking in persons or sex
trafficking. Proposed section 1022.142(b)(7) adopts this definition.
142(c) Prohibition on Inclusion of Adverse Information of Trafficking
Victims
Section 605C(b) provides that a consumer reporting agency may not
furnish a consumer report containing any adverse item of information
about a consumer that resulted from a severe form of trafficking in
persons or sex trafficking if the consumer has provided trafficking
documentation to the consumer reporting agency. The Bureau is proposing
to interpret this provision to mean a consumer reporting agency may not
furnish any adverse item of information in a consumer report to the
extent such information resulted from the consumer's involvement in a
severe form of trafficking or sex trafficking and the consumer
submitted trafficking documentation to the consumer reporting agency.
Proposed section 1022.142(c) adopts this statutory language. The Bureau
is interested in comments on whether this provision warrants further
clarification.
142(d) Method of Submission to Consumer Reporting Agencies
142(d)(1)-(d)(3)
Section 605C(c) requires that the Bureau's implementing rules
establish a method by which consumers shall submit trafficking
documentation to consumer reporting agencies. The information to be
provided by the consumer to a consumer reporting
[[Page 20776]]
agency is by nature highly sensitive and confidential. Under proposed
section 1022.142(d)(1), consumer reporting agencies would provide a
mailing address or website address if the consumer reporting agency
allows for electronic submissions, for a consumer to submit trafficking
documentation. To facilitate this, proposed section 1022.142(d)(2)
provides that a consumer reporting agency must add information on the
publicly available website stating how submissions for the blocking of
adverse items of information resulting from trafficking can be
submitted. Consumer reporting agencies must accept submissions of
trafficking documentation at the mailing address used for disputes
under section 611 of the FCRA. Also, if the consumer reporting agency
takes disputes under section 611 of the FCRA through a website, it must
also accept submission of trafficking documentation at that same
website by establishing a secure online portal. Further, a consumer
reporting agency must maintain another mailing address and, if the
consumer reporting agency accepts electronic submissions of trafficking
documentation, another website address dedicated to blocking adverse
items of information resulting from trafficking.
In addition, proposed section 1022.142(d)(3) provides that consumer
reporting agencies must allocate a reasonable amount of personnel to
respond to inquiries about the process for and status of trafficking
documentation submissions at the toll-free number for disputes and
establish a toll-free telephone number dedicated to blocking adverse
items of information resulting from trafficking.
The Bureau proposes these requirements under its authority in
sections 605C(c) and 621(e) of the FCRA as necessary to assist victims
in their efforts to prevent a consumer reporting agency from furnishing
a consumer report containing an adverse item of information that
resulted from trafficking. Trafficking victims seeking to block adverse
items of information may have difficulty receiving communications from
consumer reporting agencies because, for example, they may be in the
process of establishing new permanent residence or may have
inconsistent or no access to the internet. To ensure that consumer
reporting agencies are not furnishing adverse items of information for
which the consumer has provided the necessary trafficking
documentation, consumers need to be able to understand where and how to
submit trafficking documentation and to be able to verify that a
consumer reporting agency has received and acted upon such
documentation. The reason the Bureau is proposing that a consumer
reporting agency needs to accept submissions of trafficking
documentation at both the specific address(es) the consumer reporting
agency uses for FCRA section 611 disputes and at separate address(es)
the consumer reporting agency uses only for submission of trafficking
documentation is to maximize the chances of consumers being able to
find an address to which to submit documentation. Some consumers may
use the address for disputes as that may be the most widely known and
available address, while other consumers may seek a specific address
for trafficking documentation and may not understand that they can
submit to the address for disputes. The Bureau solicits comment on
these proposed provisions.
142(e)-(h) Overview
In order to fully implement the consumer protection provisions of
section 605C, the Bureau looked at pre-existing statutory and
regulatory requirements concerning the procedures used by consumers in
reporting identity theft and in disputing the accuracy of information
in consumer files and consumer reports and the obligations those
regulations place on consumer reporting agencies to identify what
aspects of those regulations might be useful in helping a consumer
seeking to report items of adverse information that result from a
severe form of trafficking or sex trafficking of which the consumer is
a victim. Proposed paragraphs 142(e)-(h) set forth: (1) Provisions to
address limited situations in which the consumer reporting agency may
decline or rescind a block pursuant to section 605C; (2) the
obligations on consumer reporting agencies to notify the consumer of
the outcome of its actions with respect to the submission; (3) a record
retention requirement of seven years from the date the submission is
received by consumer reporting agencies; and (4) a requirement that
consumer reporting agencies establish and maintain written policies and
procedures to ensure and monitor compliance with section 605C and these
implementing regulations.
The Bureau is proposing these procedural requirements under its
authority in FCRA section 621(e) to prescribe regulations that are
necessary and appropriate to administer and carry out the purposes and
objectives of the FCRA, and to prevent evasions or to facilitate
compliance. If the consumer is not notified of the outcome by the
consumer reporting agency, the consumer would either have to separately
request a copy of their credit report, perhaps incurring a fee, or wait
to see if they are subject to an adverse action the next time their
consumer report is used which may mean missing out on credit,
employment, or housing opportunities. Many victims of trafficking will
be in particularly urgent need of housing, employment, or credit, and
knowing within a reasonable time that a consumer reporting agency has
blocked adverse items of information may facilitate a victim's ability
to obtain these vital services. The Bureau also believes that these
requirements are necessary for preventing a consumer reporting agency
from furnishing a consumer report containing any adverse item of
information about a consumer that resulted from trafficking because it
provides consumers with the opportunity to review the outcome and if
the consumer reporting agency incorrectly rejected a submission to
dispute that outcome.
Section 605C of the FCRA does not expressly address the development
of written policies and procedures or notification by consumer
reporting agencies to furnishers of the adverse items of information
blocked for a victim of trafficking. Notifying the furnisher of the
block could give a furnisher the opportunity to cease furnishing the
blocked information to the consumer reporting agency that provided the
notification, which can help ensure that blocked information is not
refurnished and reinserted in a consumer report. If the furnisher stops
furnishing to other consumer reporting agencies it may also help to
prevent the adverse items of information from being furnished by those
consumer reporting agencies. The Bureau is seeking comment on whether a
consumer reporting agency should be required to notify a furnisher
about the consumer's submission to prevent a consumer reporting agency
from furnishing a consumer report containing any adverse item of
information about a consumer that resulted from trafficking.
142(e) Authority To Decline or Rescind a Block
The Bureau understands consumer reporting agencies may encounter
difficulty confirming certain information submitted by consumers. Under
proposed section 1022.142(e), the Bureau is proposing to provide
consumer reporting agencies with the authority to decline to act, or to
rescind action (if applicable) on a submission. This provision is
similar to section 605B(c) of the FCRA, which allows a consumer
reporting agency to decline to
[[Page 20777]]
block information relating to a consumer, or to rescind any block, if
the consumer reporting agency makes certain reasonable
determinations.\28\
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\28\ 15 U.S.C. 1681c-2(c).
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Proposed section 1022.142(e) provides that a consumer reporting
agency may decline to block, or may rescind any block, of adverse items
of information resulting from a severe form of trafficking in persons
or sex trafficking where: (1) The consumer reporting agency requests
and cannot reasonably confirm the appropriate proof of identity under
paragraph (b)(1); (2) the consumer cannot provide documentation under
paragraph (b)(6)(i); or (3) the consumer reporting agency cannot
properly identify the adverse items of information under paragraph
(b)(6)(ii).
The Bureau is not proposing to interpret section 605C as giving the
consumer reporting agency the discretion to contest the merits of the
submitted trafficking documentation, if it meets the definition in
section 605C(a) and in proposed 1022.142(b)(6)(i), and is interested in
comments on this approach. The Bureau also is not proposing to
interpret the statute as giving a consumer reporting agency the
discretion to challenge a consumer's determination that an adverse item
of information resulted from a severe form of trafficking in persons or
sex trafficking under 1022.142(b)(6)(ii), and is interested in comments
on this approach.
The Bureau is proposing to clarify in paragraph (e) that consumer
reporting agencies can request appropriate proof of identity of the
consumer who is a victim of trafficking as defined in paragraph (b)(1)
and that consumer reporting agencies can decline or rescind a block if
it cannot reasonably confirm the appropriate proof of identity. In
order for consumer reporting agencies to prevent the furnishing of
consumer reports that contain adverse items of information about a
consumer who is a victim of trafficking, the consumer reporting agency
must be able to identify the specific consumer to whom the report
relates. The Bureau is relying on its regulatory authority under
section 621(e) of the FCRA, which authorizes the Bureau to prescribe
regulations that promote accuracy and fairness in credit reporting, and
on the general rulemaking authority granted the Bureau under section
1022(b)(1) of the Dodd-Frank Act. Proposed section 1022.142(e) also
requires a consumer reporting agency, prior to exercising its authority
to decline or rescind a block, notify the consumer and attempt to
resolve any deficiency in the consumer's submission. Requiring consumer
reporting agencies to notify the consumer and attempt to resolve any
deficiencies in the consumer's submission will facilitate compliance
and is appropriate to prevent a consumer reporting agency from
furnishing a consumer report containing any adverse item of information
about a consumer that resulted from trafficking by providing consumers
an opportunity to complete their submission or correct mistakes with
respect to information or documentation they provide initially, and
making it less likely that a consumer reporting agency will decline to
block or a rescind a block in error.
The Bureau requests comment on whether additional clarification on
the manner in which a consumer reporting agency must notify the
consumer and attempt to resolve any deficiencies in the submission is
warranted. For example, should the Bureau use or adapt the procedures
in the existing process in Regulation V for consumer reporting agencies
to make reasonable requests for additional information for the purpose
of determining the validity of alleged identity theft? \29\ The Bureau
also seeks comment on whether the adverse items of information should
simply be blocked from being reported as proposed, or should be deleted
from the consumer's file (or the file be modified as appropriate).\30\
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\29\ See 12 CFR 1022.3(i)(1)(iii).
\30\ Section 611(a)(5) of the FCRA takes the latter approach
with respect to successfully disputed information. 15 U.S.C.
1681i(a)(5).
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142(f) Notification to Consumer of Actions Taken in Response to
Trafficking Documentation Submission
The Bureau is proposing in section 1022.142(f)(1) to require a
consumer reporting agency to provide written notice to a consumer of
the results of a submission within five calendar days of receipt of the
submission (or, if rescinding a previously applied block, five calendar
days after rescinding). The notification to the consumer may be sent by
mail or by other means available to the consumer reporting agency, if
authorized by the consumer.
Proposed section 1022.142(f)(2) would require a consumer reporting
agency to provide notice in writing informing the consumer that the
review of the submission is completed, a statement explaining the
outcome, a consumer report provided at no cost to the consumer that is
based upon the consumer's revised file (if applicable), a description
of the procedures used to determine the outcome, a method for
contacting the consumer reporting agency to appeal the determination or
revise the submission to cure any of the noted reasons for declining to
block the requested adverse information, and the web page consumers can
use to submit complaints to the Consumer Financial Protection Bureau.
Requiring a notice to the consumer of the outcome of the consumer
reporting agency's review of the submission and providing the consumer
with information on how to appeal or cure and how to submit a complaint
to the Bureau will facilitate compliance and is appropriate to prevent
a consumer reporting agency from furnishing a consumer report
containing any adverse item of information about a consumer that
resulted from trafficking by providing consumers with the information
they need to determine if a consumer reporting agency declined to block
or a rescind a block in error and with information about how to get any
such error corrected. The Bureau is soliciting comments on whether,
similar to section 611(a)(6)(B) of the FCRA, a consumer reporting
agency should provide the consumer with a consumer report that is based
upon the consumer's revised file (if applicable) or a consumer
reporting agency should be required to provide the consumer with
instructions for how to obtain a copy of the revised report in order to
protect the consumer's privacy.
142(g) Record Retention
Proposed section 1022.142(g) requires a consumer reporting agency
to retain evidence of submissions under section 605C. The proposal
would also require a consumer reporting agency to maintain
documentation concerning the outcome of the submissions, reasons for
declining or rescinding to act (if applicable), and compliance with
section 1022.142. Consumer reporting agencies would need to retain this
information for a period of seven years after the date the submission
by the consumer is received. Under section 605 of the FCRA, most
adverse information would be excluded from consumer reports after seven
years automatically. Requiring consumer reporting agencies to maintain
records of compliance is appropriate to administer the rule by enabling
the Bureau to assess consumer reporting agencies' compliance with the
rules and to facilitate compliance by supporting effective and
efficient enforcement of the rule in order to prevent a consumer
reporting agency from furnishing a consumer report containing any
adverse item of information about a consumer that resulted from human
trafficking. The
[[Page 20778]]
Bureau requests comment on the record retention requirement,
particularly with respect to the proposed seven-year retention period.
142(h) Policies and Procedures To Ensure and Maintain Compliance
Proposed section 1022.142(h) would require consumer reporting
agencies to establish and maintain written policies and procedures
reasonably designed to ensure and monitor the compliance of the
consumer reporting agency and its employees with the requirements of
this section. Rather than proposing a one-size-fits-all approach,
proposed section 1022.142(h) specifies that these written policies and
procedures must be appropriate to the nature, size, complexity, and
scope of the activities of the consumer reporting agency and its
employees. For example, consumer reporting agencies must develop
policies and procedures that address how requests are evaluated and
processed, and the limited circumstances a consumer reporting agency
may decline or rescind a block under section 1022.142(e). Requiring
consumer reporting agencies to maintain written policies and procedures
is appropriate to administer the rule by enabling the Bureau to assess
consumer reporting agencies' compliance with the rules and to
facilitate compliance in order to prevent a consumer reporting agency
from furnishing a consumer report containing any adverse item of
information about a consumer that resulted from human trafficking.
V. Proposed Effective Date for Final Rule
Pursuant to section 6102 of the 2022 NDAA, the amendments to the
FCRA shall apply 30 days after the Bureau issues a final rule. The
Bureau proposes that the amendments included in this proposal take
effect 30 days after the date of the final rule's publication in the
Federal Register. Under section 553(d) of the Administrative Procedure
Act, the required publication or service of a substantive rule must be
made not less than 30 days before its effective date, with certain
exceptions not applicable here.\31\ Thus, the final rule would take
effect at the same time as section 605C, which would avoid uncertainty
for consumers who are victims of trafficking as well as for consumer
reporting agencies. The Bureau seeks comment on the proposed effective
date.
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\31\ 5 U.S.C. 553(d).
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VI. Dodd-Frank Act Section 1022(b)(2) Analysis
In developing this proposed rule, the Bureau has considered the
proposed rule's potential benefits, costs, and impacts in accordance
with section 1022(b)(2)(A) of the Consumer Financial Protection Act of
2010 (CFPA).\32\ The Bureau requests comment on the preliminary
analysis presented below as well as submissions of additional data that
could inform the Bureau's analysis of the benefits, costs, and impacts.
In developing the proposed rule, the Bureau has consulted or offered to
consult with the prudential banking regulators (the FDIC, FRB, NCUA,
and OCC) and the Bureau of Indian Affairs, several offices in the
Department of Justice, Department of Health and Human Services,
Department of Homeland Security, and the FTC, including regarding
consistency of this rule with any prudential, market, or systemic
objectives administered by those agencies, in accordance with section
1022(b)(2)(B) of the CFPA.
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\32\ 12 U.S.C. 5512(b)(2)(A).
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The Bureau expects that the proposed rule would benefit consumers
who are victims of a severe form of trafficking in persons or sex
trafficking and have adverse information on file with a consumer
reporting agency as a result of that trafficking. The potential
benefits to individual consumers who are victims of trafficking could
be considerable--adverse information from consumer reporting agencies
could negatively affect a consumer's ability to obtain housing,
employment, credit or other immediate and longer-term services
necessary to support long-term independence and financial stability.
Conversely, the proposed rule would impose costs on consumer
reporting agencies in the form of compliance costs associated with
processing requests from consumers to block adverse information and
effecting the necessary blocks. While the Bureau does not have data to
quantify these costs, the Bureau expects the costs of complying with
the requirements of the proposed rule to be small in magnitude.
Consumer reporting agencies are already required by 15 U.S.C. 1681c-2
to have systems in place to accept reports of identity theft, and to
respond to those reports by suppressing information on any consumer
reports. Consumer reporting agencies also have systems in place to
address treatment of inaccurate and unverifiable information as
required by 15 U.S.C. 1681i(a)(5) and concerning the notice of results
of reinvestigation under 15 U.S.C. 1681i(a)(6). This proposed rule's
procedural requirements are modeled on these requirements.
Although the Bureau characterizes qualitatively the nature of the
benefits to consumers and the costs to firms above, it is not able to
quantify the overall magnitude of the likely costs and benefits of the
proposed rule. Quantifying these costs and benefits would require an
estimate of the number of consumers likely to submit information to
support a block under the proposed rule in a typical year. Not all
victims of trafficking will necessarily have adverse information with a
consumer reporting agency, and among those who do, not all will make a
submission or be able to provide the required documentation.\33\ The
Bureau does not have a way to estimate the number of trafficking
victims who will make a request, and according to the State Department,
there is no reliable estimate of the annual number of trafficking
victims in the United States.
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\33\ This may occur if the consumer is not aware of the adverse
information, or is not seeking any product or service that might
rely on a consumer report including that information (e.g., if the
adverse information relates to credit and the consumer is not
currently seeking new credit). In addition, although the proposed
rule is intended to make the submission process as straightforward
as possible for victims of trafficking and intends to conduct
outreach to ensure that victims are aware of their rights, consumers
may not utilize the reporting process if they do not know their
right to make a request, because they lack the required
documentation, or because they believe the process to be more costly
in time and effort than the potential benefits of blocking the
adverse information.
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To provide a rough sense of scale, the Bureau compares available
statistics on human trafficking in the United States to statistics on
identity theft, which have a similar treatment under the FCRA as under
the proposed rule. In 2020, the National Human Trafficking Hotline made
8,701 referrals for potential victims of trafficking.\34\ For
comparison, the FTC received nearly 1.4 million complaints related to
identity theft in 2020.\35\ Both the number of referrals from the
National Human Trafficking Hotline and the number of identity theft
complaints to the FTC likely undercount the true incidence of
trafficking and identity theft, respectively. However, given that not
all victims of trafficking will have adverse information with a
consumer reporting agency, it seems reasonable to assume
[[Page 20779]]
that the annual number of consumer submissions to consumer reporting
agencies under the proposed rule would be at least two orders of
magnitude less than the volume similar requests related to identity
theft. As a result, the Bureau expects that although the potential
benefits of the proposed rule to individual consumers who are victims
of trafficking may be considerable, the aggregate benefits to consumers
and the aggregate costs to consumer reporting agencies are likely to be
small.\36\
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\34\ Off. to Monitor and Combat Trafficking in Persons, U.S.
Dep't of State, 2021 Trafficking in Persons Report 591, https://www.state.gov/reports/2021-trafficking-in-persons-report/ (last
visited Mar. 21, 2022).
\35\ Fed. Trade Comm'n, Consumer Sentinel Network Data Book
2020, at 7 (Feb. 2021), https://www.ftc.gov/system/files/documents/reports/consumer-sentinel-network-data-book-2020/csn_annual_data_book_2020.pdf.
\36\ It is possible that consumer reporting agencies may incur
some costs associated with submissions from individuals who claim
fraudulently that adverse items of information in their consumer
reports result from a severe form of trafficking or sex trafficking
of which they allege to be a victim. Given the documentation
requirements in the proposed rule, the Bureau does not expect this
would happen often. The Bureau seeks comment on this assessment.
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The proposed rule may increase consumer access to credit, to the
extent that consumers who are victims of trafficking and have adverse
information related to that trafficking present on a credit report, and
blocking that adverse information makes it easier for those consumers
to obtain credit.
The proposed rule would not have a unique impact on insured
depository institutions or insured credit unions with less than $10
billion in assets described in section 1026(a) of the Dodd-Frank Act.
Finally, the proposed rule would not have a unique impact on rural
consumers.
VII. Regulatory Flexibility Act Analysis
The Regulatory Flexibility Act (RFA) generally requires an agency
to conduct an initial regulatory flexibility analysis (IRFA) and a
final regulatory flexibility analysis (FRFA) of any rule subject to
notice-and-comment rulemaking requirements, unless the head of the
agency certifies that the rule will not, if promulgated, have a
significant economic impact on a substantial number of small
entities.\37\ The Bureau also is subject to certain additional
procedures under the RFA involving the convening of a panel to consult
with small business representatives prior to proposing a rule for which
an IRFA is required.\38\ The proposed rule would apply to all consumer
reporting agencies, including all those that are small businesses under
the RFA. However, it is unlikely that any small business will
experience a significant economic impact as a result of the proposal.
As discussed in section VI above, the number of submissions for
blocking adverse information each year are likely to be small, and
consumer reporting agencies are already required to have processes in
place for processing similar requests due to existing requirements
related to identity theft and dispute procedures under section 611 of
the FCRA. Accordingly, the Director of the Bureau certifies that this
proposal, if adopted, would not have a significant economic impact on a
substantial number of small entities. Thus, neither an IRFA nor a small
business review panel is required for this proposal. The Bureau
requests comment on the analysis above and requests any relevant data.
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\37\ 5 U.S.C. 601 through 612.
\38\ 5 U.S.C. 609.
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VIII. Paperwork Reduction Act
Under the Paperwork Reduction Act of 1995 (PRA),\39\ Federal
agencies are generally required to seek approval from the Office of
Management and Budget (OMB) for data collection, disclosure, and
recordkeeping requirements (collectively, information collection
requirements) prior to implementation. Under the PRA, the Bureau may
not conduct or sponsor, and, notwithstanding any other provision of
law, a person is not required to respond to, an information collection
unless the information collection displays a valid control number
assigned by OMB. As part of its continuing effort to reduce paperwork
and respondent burden, the Bureau conducts a preclearance consultation
program to provide the general public and Federal agencies with an
opportunity to comment on the information collection requirements in
accordance with the PRA. This helps ensure that the public understands
the Bureau's requirements or instructions, respondents can provide the
requested data in the desired format, reporting burden (time and
financial resources) is minimized, information collection instruments
are clearly understood, and the Bureau can properly assess the impact
of information collection requirements on respondents.
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\39\ 44 U.S.C. 3501 et seq.
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This proposed rule would amend 12 CFR part 1022 (Regulation V). The
Bureau's OMB control number for Regulation V is 3170. As described
below, the proposed rule would create the following new information
collection requirements in Regulation V:
The proposed rule would require consumer reporting
agencies to accept trafficking and other documentation from consumers,
process the submissions, and block any adverse item of information
identified by the consumer that resulted from a severe form of
trafficking in persons or sex trafficking under proposed section
1022.142(d)-(e). Consumer reporting agencies would be required to
inform consumers of their decision and actions with respect to the
submission under proposed section 1022.142(f).
The proposed rule would require consumer reporting
agencies to retain evidence of all submissions by consumers pursuant to
these regulations, including actions taken in response to the
submissions, reasons for declining or rescinding the block requests,
and compliance with this section for a seven-year period under proposed
section 1022.142(g).
The proposed rule would require consumer reporting
agencies to establish and maintain written policies and procedures
reasonably designed to ensure and monitor the compliance of the
consumer reporting agency and its employees with the requirements of
this rule under proposed section 1022.142(h).
The collections of information contained in this proposed rule, and
identified as such, have been submitted to OMB for review under section
3507(d) of the PRA. A complete description of the information
collection requirements (including the burden estimate methods) is
provided in the information collection request (ICR) that the Bureau
has submitted to OMB under the requirements of the PRA. Please send
your comments to the Office of Information and Regulatory Affairs, OMB,
Attention: Desk Officer for the Bureau of Consumer Financial
Protection. Send these comments by email to [email protected]
or by fax to 202- 395-6974. If you wish to share your comments with the
Bureau, please send a copy of these comments as described in the
ADDRESSES section above. The ICR submitted to OMB requesting approval
under the PRA for the information collection requirements contained
herein is available at www.regulations.gov as well as on OMB's public-
facing docket at www.reginfo.gov.
Title of Collection: Regulation V: Fair Credit Reporting Act.
OMB Control Number: 3170-0002.
Type of Review: Revision of a currently approved collection.
Affected Public: Private Sector; Federal, State, and Tribal
Governments.
Estimated Number of Respondents: The Bureau does not have enough
information to estimate the number of respondents and is assuming de
minimis. The Bureau invites comment on this assumption.
Estimated Total Annual Burden Hours: The Bureau does not have
enough information to know how frequently this collection will occur or
[[Page 20780]]
the burden it will impose. The Bureau invites comment on this
collection.
Comments are invited on: (a) Whether the collection of information
is necessary for the proper performance of the functions of the Bureau,
including whether the information will have practical utility; (b) The
accuracy of the Bureau's estimate of the burden of the collection of
information, including the validity of the methods and the assumptions
used; (c) Ways to enhance the quality, utility, and clarity of the
information to be collected; and (d) Ways to minimize the burden of the
collection of information on respondents, including through the use of
automated collection techniques or other forms of information
technology. Comments submitted in response to this notification will be
summarized and/or included in the request for Office of Management and
Budget (OMB) approval. All comments will become a matter of public
record.
If applicable, the final rule will inform the public of OMB's
approval of the new information collection requirements proposed herein
and adopted in the final rule. If OMB has not approved the new
information collection requirements prior to publication of the final
rule in the Federal Register, the Bureau will publish a separate
notification in the Federal Register announcing OMB's approval prior to
the effective date of the final rule.
List of Subjects in 12 CFR Part 1022
Banks, Banking, Consumer protection, Credit unions, Holding
companies, National banks, Privacy, Reporting and recordkeeping
requirements, Savings associations.
Authority and Issuance
For the reasons set forth above, the Bureau proposes to amend
Regulation V, 12 CFR part 1022, as set forth below:
PART 1022--FAIR CREDIT REPORTING ACT (REGULATION V)
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1. Revise the authority citation for part 1022 to read as follows:
Authority: 12 U.S.C. 5512, 5581; 15 U.S.C. 1681a, 1681b, 1681c,
1681c-1, 1681c-3, 1681e, 1681g, 1681i, 1681j, 1681m, 1681s, 1681s-2,
1681s-3, and 1681t; Sec. 214, Public Law 108-159, 117 Stat. 1952.
Subpart O--Miscellaneous Duties of Consumer Reporting Agencies
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2. Add Sec. 1022.142 to read as follows:
Sec. 1022.142 Prohibition on inclusion of adverse information in
consumer reporting in cases of human trafficking.
(a) Scope. This section applies to any consumer reporting agency as
defined in section 603(f) of the FCRA, 15 U.S.C. 1681a(f).
(b) Definitions. For purposes of this section:
(1) Appropriate proof of identity means proof of identity that
meets the requirements in section 1022.123.
(2) Consumer report has the meaning provided in section 603(d) of
the FCRA, 15 U.S.C. 1681a(d).
(3) Consumer reporting agency has the meaning provided in section
603(f) of the FCRA, 15 U.S.C. 1681a(f).
(4) Severe forms of trafficking in persons has the meaning provided
in section 103 of the Trafficking Victims Protection Act of 2000, 22
U.S.C. 7102(11).
(5) Sex trafficking has the meaning provided in section 103 of the
Trafficking Victims Protection Act of 2000, as amended by section 108
of the Justice for Victims of Trafficking Act of 2015, 22 U.S.C.
7102(12).
(6) Trafficking documentation means one or more documents that
satisfy paragraph (b)(6)(i) and (ii) of this section:
(i) Documentation that:
(A) Is of a determination that a consumer is a victim of
trafficking made by a Federal, State, or Tribal governmental entity or
a court of competent jurisdiction; or
(B) Consists of documents filed in a court of competent
jurisdiction indicating that a consumer is a victim of trafficking; and
(ii) Documentation, which may consist of a statement by the
consumer, that identifies items of adverse information that should not
be furnished by a consumer reporting agency because the items resulted
from a severe form of trafficking in persons or sex trafficking of
which the consumer is a victim.
(7) Victim of trafficking means a person who is a victim of a
severe form of trafficking in persons or sex trafficking.
(c) Prohibition on inclusion of adverse information of trafficking
victims. A consumer reporting agency may not furnish a consumer report
containing any adverse item of information about a consumer that
resulted from a severe form of trafficking in persons or sex
trafficking if the consumer has provided trafficking documentation to
the consumer reporting agency.
(d) Method of submission to consumer reporting agencies. (1)
Mailing and website address. A consumer reporting agency must provide a
mailing address for a consumer to submit required documentation and may
also establish a secure online portal for submissions. A consumer
reporting agency must accept trafficking documentation sent to the
mailing and, if applicable, website addresses used for disputes under
section 611 of the FCRA, and a consumer reporting agency must maintain
a dedicated mailing and, if applicable, website address for blocking
adverse items of information resulting from trafficking.
(2) Disclosing methods for submission. A consumer reporting agency
must add information on the publicly available website stating how
submissions for the blocking of adverse items of information resulting
from trafficking can be submitted.
(3) Toll-free telephone number. A consumer reporting agency must:
(i) Allocate a reasonable amount of personnel to respond to
consumer inquiries about the process for and status of trafficking
documentation submissions at the toll-free telephone number used for
disputes under section 611 of the FCRA; and
(ii) Establish a toll-free telephone number dedicated to addressing
submissions from consumers seeking to block adverse items of
information resulting from trafficking.
(e) Authority to decline or rescind a block. A consumer reporting
agency may decline to block, or may rescind any block, of adverse items
of information resulting from a severe form of trafficking in persons
or sex trafficking only where the consumer reporting agency requests
and cannot reasonably confirm the appropriate proof of identity under
paragraph (b)(1) of this section, the consumer cannot provide
documentation under paragraph (b)(6)(i) of this section, or the
consumer reporting agency cannot properly identify the adverse items of
information under paragraph (b)(6)(ii) of this section. A consumer
reporting agency may decline or rescind a block only after notifying
the consumer and attempting to resolve any deficiency in the consumer's
submission.
(f) Notification to consumer of actions taken in response to
trafficking documentation submission--(1) In general. A consumer
reporting agency must provide written notice to a consumer of actions
it has taken in response to a submission of trafficking documentation
not later than five calendar days after the receipt of the submission
(or, if rescinding a previously applied block, five calendar days after
rescinding), by mail or, if authorized by the consumer for that
[[Page 20781]]
purpose, by other means available to the consumer reporting agency.
(2) Contents. The notice must include the following:
(i) A statement that the review of the submission is completed;
(ii) A statement of the outcome of the review of the submission,
including the reason(s) if the consumer reporting agency declined or
rescinded to block the requested adverse information under paragraph
(d) of this section;
(iii) A consumer report, provided at no cost to the consumer, that
is based upon the consumer's revised file (if applicable) as a result
of the consumer's submission;
(iv) A description of the procedure used to determine the outcome;
(v) A method for contacting the consumer reporting agency to appeal
the determination or revise the submission to cure any of the noted
reasons for declining to block the requested adverse information; and
(vi) The web page consumers can use to submit complaints to the
Consumer Financial Protection Bureau.
(g) Record retention. For a period of seven years after the date
the submission by the consumer is received under paragraph (d)(2) of
this section, a consumer reporting agency must retain evidence of all
such submissions, including the actions taken by the consumer reporting
agency, reasons for declining or rescinding the block requests, and
compliance with this section.
(h) Policies and procedures to ensure and maintain compliance. A
consumer reporting agency must establish and maintain written policies
and procedures reasonably designed to ensure and monitor the compliance
of the consumer reporting agency and its employees with the
requirements of paragraphs in this section. These written policies and
procedures must be appropriate to the nature, size, complexity, and
scope of the activities of the consumer reporting agency and its
employees.
Rohit Chopra,
Director, Consumer Financial Protection Bureau.
[FR Doc. 2022-07528 Filed 4-7-22; 8:45 am]
BILLING CODE P