The Consumer Financial Protection Bureau (CFPB) recently issued an interpretive rule to clarify that the Fair Credit Reporting Act’s (FCRA) express preemption provisions have a narrow and targeted scope with respect to state credit reporting laws. The interpretive rule is designed to reiterate that states retain substantial flexibility to pass laws involving consumer reporting regulations to address problems affecting their local economies and citizens. As an interpretive rule, it does not impose any new obligations or revise any existing obligations, but rather it does clarify existing provisions of the FCRA.
The interpretive rule highlights that state laws that are consistent with the FCRA will not be preempted by the federal statute, and that states are free to impose stricter credit reporting regulations when not expressly preempted by the FCRA. The interpretive rule clarifies the preemptive scope of Section 1681t(b), with particular focus on Sections 1681t(b)(1) and (5).
15 U.S.C. 1681t(b)(1)
Under Section 1681t(b)(1), state laws are not preempted unless they are “with respect to any subject matter regulated under” certain sections or subsections of the FCRA. Section 1681t(b)(1) also prefaces the clause with the phrase “relating to” that further narrows the enumerated section.
The interpretive rule clarifies that both the phrases “with respect to” and “relating to” were intended by Congress to narrow the FCRA’s express preemption provisions in order to afford states the opportunity to impose additional obligations. Indeed, the CFPB posits that the legislative history of the FCRA preemption provisions confirm that only subject matter with a high level of specificity is subject to preemption.
For example, although Section 1681t(b)(1)(E) preempts state laws “with respect to any subject matter regulated under” Section 1681c “relating to information contained in consumer reports,” Section 1681c only pertains to certain types of information contained in consumer reports. Thus, Section 1681t(b)(1)(E) does not preempt state laws with respect to subject matter that falls outside the ambit of Section 1681c. Because Section 1681c does not contain any general restrictions on the content of a consumer report, state laws regarding what or when items may be initially included in a report would generally not be preempted under the FCRA (e.g., medical debt, rental arrears, and eviction information).