CFPB Proposes Rule to Assist Survivors of Human Trafficking in Obtaining Credit

On April 7, 2022, the Consumer Financial Protection Bureau (CFPB) announced it is proposing a rule that would assist survivors of human trafficking in achieving financial independence.  The proposed rule would aid survivors of human trafficking seeking to open bank accounts, access credit, and gain employment, by preventing credit reporting agencies (CRAs) from reporting negative information about the survivors resulting from their abuse.  The CFPB reports that human trafficking in the U.S. affects hundreds of thousands of victims and families, and government efforts are required to respond to the needs of survivors who have suffered financial abuse, as they attempt to rebuild their financial lives.

The CFPB’s Notice of Proposed Rulemaking follows the recently-enacted Debt Bondage Repair Act, which requires the CFPB to use its rulemaking authorities to implement the law through rule changes to Regulation V, which ensures consumers’ credit information is fairly reported by CRAs.  The Debt Bondage Repair Act prohibits CRAs from providing consumer reports that contain any negative item of information about a survivor of human trafficking from any period the survivor was being trafficked.  Accordingly, the CFPB’s proposed rule, if enacted, will include guidelines to (i) help survivors submit documentation to CRAs to report their status as having experienced a form of trafficking; (ii) require CRAs to block adverse information in consumer reports after receiving a survivor’s submission of documentation, notify a survivor of actions taken in response to a submission, and retain evidence of the survivor’s submission for seven years; and (iii) make the rules applicable to all CRAs, regardless of reach or scope, including specialty CRAs focused on areas like employment screening, tenant screening, check and bank screening, personal property insurance, and medical.

In its Notice, the CFPB reports that “in the United States human traffickers compel victims to engage in commercial sex and to work in legal and non-legal industries and sectors, including, for example, agriculture, janitorial services, construction, landscaping, restaurants, factories, child care, care for persons with disabilities, domestic work, salon services, massage parlors, peddling and begging, and drug smuggling and distribution.”  The CFPB further reports that while being trafficked, many of these victims suffer from financial abuse, which is used by traffickers as a means to earn money and as a method of control.  For example, traffickers may rack up charges in survivors’ names and on their accounts, knowing that afterwards their victims will be unable to rent an apartment, purchase a car to go to work, or even find a job with a living wage.  The CFPB’s proposed rule is thus critical to the ability of victims to be able to take basic steps such as obtaining housing and employment and to move toward greater financial stability and independence.