For people in Illinois, consumer protection for credit reporting and other personal finance topics can be a murky subject. Recently, the Consumer Financial Protection Bureau, or CFPB, issued a ruling to help clarify its jurisdiction and that of the state government.
Fair Credit Reporting
The Fair Credit Reporting Act is a federal law that was passed in 1970. It empowers the government to regulate and oversee the process of creating credit reports for citizens. That includes creating rules about how the reports should be made, how the data should be collected, and penalties for things like incorrect information in a report or misuse of a report. This is one of the most fundamental laws about consumer finance in the US, and it creates a national set of rules and standards for credit reports.
However, the agency that is in charge of consumer finance, the Consumer Financial Protection Bureau, released a memo this year that reminds state governments that they are free to make their own rules for credit reporting. In other words, the states can set more strict and stringent regulations for credit reporting in their own jurisdiction if they so desire. This is similar to other types of federal regulation, where the federal regulations act as a minimum and states can pass their own stricter variations. A parallel example is a minimum wage, where the states can pass a local minimum wage that is higher than the federal one.
This provides states with an opportunity to act and provide more protection for their residents against misuses and abuses of the credit reporting system, which plays a major role in personal finance.