The Bank Policy Institute and the Kentucky Bankers Association have initiated legal proceedings against the Consumer Financial Protection Bureau (CFPB) over its rulemaking under Section 1033 of the Dodd-Frank Act. This regulation addresses consumer access to financial data and its protection. The lawsuit, filed in U.S. District Court in Lexington, KY, claims that the CFPB has exceeded its authority, endangering consumer privacy and account security.
Greg Baer, President & CEO of BPI, stated: “BPI supports a competitive marketplace where consumers control how their personal financial data is used and with whom it is shared, so long as their data remains protected. Unfortunately, the CFPB delivered a rule that treats sensitive financial data with as little care as a consumer’s web browsing history." He expressed concerns about technology companies gaining access to sensitive information without adequate oversight.
Ballard W. Cassady Jr., President & CEO of the Kentucky Bankers Association, added: “The CFPB’s 1033 rulemaking jeopardizes the safety and soundness of our banking system and fails to protect consumer data."
The lawsuit outlines several issues with the CFPB's rule:
1. Lack of oversight for third parties using bank customer data.
2. Increased fraud risk due to inadequate safeguarding practices.
3. Continued use of unsafe practices like screen scraping.
4. Insufficient accountability for third parties handling consumer data.
5. Uncompensated use by third parties of systems developed by banks.
6. An unreasonable timeline for implementation without consensus standards.
The banks argue that while they support competition and consumer protection, these regulations could undermine existing laws and expose customers to risks.
The Bank Policy Institute represents various banks in policy matters including cybersecurity and fraud issues. The Kentucky Bankers Association provides advocacy for the financial services industry at both state and national levels.
For more details on this legal action or to obtain a copy of the complaint, contact Sean Oblack at sean.oblack@bpi.com.