Consumer Financial Protection Circular 2022-04
Insufficient data protection or security for sensitive consumer information
Can entities violate the prohibition on unfair acts or practices in the Consumer Financial Protection Act (CFPA) when they have insufficient data protection or information security?
Yes. In addition to other federal laws governing data security for financial institutions, including the Safeguards Rules issued under the Gramm-Leach-Bliley Act (GLBA), “covered persons” and “service providers” must comply with the prohibition on unfair acts or practices in the CFPA. Inadequate security for the sensitive consumer information collected, processed, maintained, or stored by the company can constitute an unfair practice in violation of 12 U.S.C. 5536(a)(1)(B). While these requirements often overlap, they are not coextensive.
Acts or practices are unfair when they cause or are likely to cause substantial injury that is not reasonably avoidable or outweighed by countervailing benefits to consumers or competition. Inadequate authentication, password management, or software update policies or practices are likely to cause substantial injury to consumers that is not reasonably avoidable by consumers, and financial institutions are unlikely to successfully justify weak data security practices based on countervailing benefits to consumers or competition. Inadequate data security can be an unfair practice in the absence of a breach or intrusion.
MORE FIDO in the News
GB News: If you’re using a password on this list, change it now – hackers could break into your account in seconds
The most common passwords of 2023, including “123456” and “admin,”...12월 1, 2023
Biometric Update: Digital IDs mean manageable and critical change, FIDO tells US federal security leaders
FIDO Alliance webinar aimed at U.S. federal data-security officials to...
Inside Cybersecurity: FIDO Alliance emphasizes need for agency feedback on implementing authentication standard
FIDO Alliance seeks increased government involvement to develop comprehensive guidelines...