The Consumer Financial Protection Bureau has initiated a rulemaking process related to the Fair Credit Reporting Act aimed at protecting survivors of domestic violence, elder abuse, and financial coercion from the long-lasting financial harm of coerced debt.
Driving the news: Earlier this week, the CFPB announced an advance notice of proposed rulemaking (ANPR) to amend the FCRA. This includes revising the definitions of “identity theft” and “identity theft report” to encompass coerced debt — credit obtained through manipulation, threats, or violence.
What they’re saying: CFPB Director Rohit Chopra stated, “Expanding identity theft protections could help survivors rebuild their financial lives and ensure our credit reporting system is not used as a tool for abuse.” Studies show that coerced debt traps survivors in abusive situations, with nearly 75% reporting that financial abuse delayed their ability to leave abusive relationships.
Key details:
- The proposed rule would enable survivors to use identity theft protections to remove coerced debts from their credit reports.
- The CFPB is soliciting public comments on issues like the prevalence of coerced debt, barriers to current protections, and the impact on survivors’ credit risks.
- This initiative follows similar actions, including a 2022 rule prohibiting credit bureaus from reporting negative items tied to human trafficking.
By the numbers:
- Studies indicate that between 94% and 99% of survivors of intimate partner violence have experienced economic abuse, which often includes coerced debt.
- Nearly three-quarters of domestic violence survivors report staying longer in abusive relationships partly due to coerced debt.
- A significant portion of survivors who successfully remove coerced debt from their credit reports experience a substantial improvement in credit scores — with one-third seeing an increase of 20 points or more, enabling them to qualify for better financial products.
What’s next: Stakeholders, including consumer advocates, credit reporting agencies, and industry members, are encouraged to submit comments by March 7, 2025. This input will shape the CFPB’s forthcoming proposed rule.
