On October 28, the Consumer Financial Protection Bureau (CFPB or Bureau) issued a new interpretive rule replacing its 2022 interpretive rule (withdrawn in May 2025) concerning the scope of preemption under the Fair Credit Reporting Act (FCRA). This new interpretive rule clarifies that the FCRA broadly preempts state laws related to consumer reporting, reinforcing Congress’s intent to establish national standards when information is used to determine a consumer’s eligibility for credit, insurance, employment and the like. This move replaces the previous rule, which was criticized for its potential to create regulatory confusion.
Background
The FCRA, enacted in 1970, has undergone several amendments to address the evolving landscape of consumer reporting. Initially, the FCRA was interpreted to preempt state laws only when they were inconsistent with its provisions. However, in 1996, Congress expanded this preemption to ensure national standards with the aim of preventing a fragmented system of state regulations. This preemption was made permanent in 2003 by the Fair and Accurate Credit Transactions Act (FACTA), which was enacted to promote economic growth and maintain uniformity in credit reporting. Courts in turn have recognized Congress’s desire for a national comprehensive regulatory scheme when applying concepts of conflict or obstacle preemption to avoid state’s creating a regulatory quagmire.
The current CFPB concluded that the 2022 interpretive rule established too narrow a scope of preemption, allowing states too much leeway in regulating consumer reports, leading to a patchwork of conflicting state and federal regulations.
Key Points of the New Interpretive Rule
- Broad Preemption Scope: The new rule emphasizes that the FCRA broadly preempts state laws concerning consumer reporting. This aligns with Congress’s intent to create a cohesive national standard, avoiding the complexities of varying state regulations.
- Withdrawal of the 2022 Rule: The CFPB has confirmed the withdrawal of the 2022 interpretive rule, which was criticized for its narrow interpretation of preemption. The Bureau argues that the 2022 rule did not reduce compliance burdens and was not legally binding.
- Clarification of Preemption Language: The new rule clarifies that phrases like “with respect to” and “relating to” in the FCRA’s preemption clauses are intended to have a broad scope, covering all state laws within the field of consumer reporting.
- Legislative Intent and History: The CFPB argues that the legislative history of the FCRA amendments supports a broad preemption approach, because Congress aimed to establish a national consumer reporting system to enhance economic development and consumer access to credit.
- Impact on the Consumer-Reporting Market: The new rule seeks to maintain a unified national credit market, preventing the fragmentation that could arise from state-specific regulations. This is crucial for ensuring consistent credit reporting standards across the country.
Conclusion
The CFPB’s decision to withdraw the 2022 interpretive rule on FCRA preemption is in line with the broader deregulatory efforts initiated by the CFPB under Executive Order 13891, issued during President Trump’s previous administration (and discussed here). Despite former President Biden’s revocation of that Executive Order, the Bureau has previously emphasized that the principles it expressed “are no less salient today.”
