The Consumer Financial Protection Bureau (CFPB) has launched an inquiry into the way financial data is used in consumer transactions. The federal consumer watchdog is seeking public feedback about how confident consumers are in whether or not their data is secure.
"Consumers should be able to use their financial records and account information and securely share access in an electronic format," said CFPB Director Richard Cordray on November 17. "Technology provides opportunities to use these records to create new consumer tools that help improve financial lives. To realize that potential, we are launching a public inquiry into how much control consumers have over their records and how easy and secure it is for them to share their records with third parties."
When anyone with a bank, brokerage, credit card or other financial account makes a transaction, he creates a new financial record --one that is maintained by the account providers. As these records have moved from paper to digital, where information is kept in a data base rather than a file cabinet, data aggregators and similar firms are using that information to create and sell new products--not necessarily to the benefit of people whose data they are exploiting. These firms may not only be involved in creating new financial products, but in mining data that enables banks to sell them to existing customers or troll for new ones.
By the same token, the CFPB has noted that some financial institutions are thwarting access to customer data that keeps new, competing firms from creating better products. The CFPB has rulemaking authority over the use of this data.