WASHINGTON –The CFPB has issued a new rule that reasserts that the Fair Credit Reporting Act (FCRA) has broad federal preemption, overturning a previous 2022 rule that suggested a narrower scope for preemption.
The new rule clarifies that federal law, not state law, largely governs credit reporting issues, aiming to prevent a mixed bag of different state regulations.
According to analysts, the CFPB’s new interpretive rule confirms that the FCRA preempts state laws on many credit reporting matters, including prescreening, dispute procedures, and adverse-action notices.
The rule being rescinded was a 2022 interpretive rule that stated FCRA had a “narrow sweep” and allowed for more state regulation, including on issues such as medical debt, rental data, and arrest records.
Rule Was ‘Flawed’
In releasing the new rule, which comes as the Trump administration has significantly scaled back much of the Bureau’s rulemaking and staff, the CFPB said the 2022 rule was flawed, created confusion, and incorrectly interpreted Congress’s intent for a national standard for credit reporting. It further stated the 2022 rule underestimated the broad preemption already established by the FCRA.
For credit unions, analysts said the rescission of the 2022 rule and the issuance of the new interpretive rule mean that state laws on many aspects of credit reporting are preempted by federal law.
