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ARTICLE · 19 AUGUST 2022

CFPB Circular: Safeguard Consumer Data Or Face Liability

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On August 11, the CFPB published a circular clarifying liability under consumer financial protection law for bank and nonbank financial companies that fail to safeguard consumer data.

United StatesFinance and Banking
Moorari K. Shah
Moorari K. Shah
A.J. Dhaliwal
A.J. Dhaliwal
Katie Daw
Katie Daw
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On August 11, the CFPB published a circular clarifying liability under consumer financial protection law for bank and nonbank financial companies that fail to safeguard consumer data. The circular describes how firms may be violating the CFPA's prohibition on unfair acts or practices with respect to the handling of consumer data by not implementing adequate measures to protect against data security incidents. These data security incidents may lead to significant harm to a few consumers—who, for example, become victims of targeted identify theft after a breach—or may lead to harm of many consumers in the event of large scale, customer-base-wide breaches. The circular includes specific examples for reference.

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