Eight national trade groups have filed a petition with the CFPB that urges the Bureau to engage in rulemaking to define larger participants in the market for data aggregation services. The trade groups are the American Bankers Association, Consumer Bankers Association, Credit Union National Association, Housing Policy Counsel, Independent Community Bankers of America, National Association of Federally Insured Credit Unions, National Bankers Association, and Clearing House Association. The petition has been docketed by the CFPB pursuant to the new procedure that the CFPB established in February 2022 for members of the public to submit petitions for rulemaking (including amendments to or repeals of existing rules).
The trade groups assert that there is currently a “supervisory imbalance” among participants in the market for aggregation services, with large data holders such as banks and credit unions regularly supervised by the CFPB while non-depository entities such as data aggregators and data users are not examined by the CFPB. They point out that “the current market largely relies on discrete and contractual relationships by data holders to maintain oversight and assess any potential risks to consumers by data aggregators and data uses, or requires data holders to implement other mitigation strategies for screen scraping activities.” According to the trade groups, the current situation creates “an unsustainable model as the aggregation services market grows.” They raise the potential for inconsistent enforcement of the laws applicable to data aggregators which, in turn, “raise[s] the prospect that potential consumer harm associated with the activities of data aggregators and data users will not be timely identified and remedied.” According to the trade associations, the CFPB’s use of its risk-based supervisory authority to supervise data aggregators as companies that “pose risk” would be insufficient “to effectuate consistent and abiding supervision of all larger participants in the data aggregation market” because any entity that allegedly poses risk can challenge that order and the orders may be terminated after two years.
The CFPB is currently engaged in rulemaking to implement Section 1033 of the CFPA. Section 1033 requires consumer financial services providers to give consumers access to certain financial information. In October 2020, the CFPB issued an Advance Notice of Proposed Rulemaking (ANPR) in connection with the 1033 rulemaking. In their petition, the trade groups assert that the CFPB “should ensure that data aggregators and data users that are larger participants in the aggregation services market—not just banks and credit unions—are examined for compliance with applicable federal consumer financial law, especially the requirements of the forthcoming 1033 rulemaking, including the substantive prohibitions on the release of confidential commercial information.” They also assert that the position they espouse was supported by “a broad and diverse collation of nonbank organizations (including data aggregators”) that submitted comments in response to the ANPR. The trade groups do not suggest a standard for the CFPB to use for determining whether a data aggregator qualifies as a “larger participant.”
In addition to asking the CFPB to amend its larger participant rule to add a new section covering providers of data aggregation services, the trade groups also petition the CFPB to define “aggregation service” as a “financial product or service” for purposes of the CFPA. They assert that the CFPB has authority to promulgate such a regulation and cite to various provisions of the CFPA as the source of such authority.
The trade associations indicate that their petition is filed pursuant to Section 553(e) of the Administrative Procedure Act (APA). Section 553(e) provides that “[e]ach
agency shall give an interested person the right to petition for the issuance, amendment, or repeal of a rule,” a denial of which must be justified by a statement of reasons pursuant to section 555(e) of the APA and can be appealed to the courts under sections 702 and 706 of the APA. They also note that the APA requires that “[p]rompt notice … be given of the denial in whole or in part” of any petition under 5 U.S.C. § 553, and that any denial shall include a “brief statement of the grounds for denial.”