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Seizing on revelations that the National Security Agency has been scooping up the phone and Internet communications of ordinary Americans, U.S. Rep. Sean Duffy, R-Wis., is sounding new alarms about citizen surveillance by another, relatively new government agency.
In a July 17, 2013 interview on "Opinion Journal," a Wall Street Journal online show, he invoked the National Security Agency in making his attack on the Consumer Financial Protection Bureau.
"The CFPB is collecting financial information, monitoring financial information, of millions of Americans, and they have no clue that it’s going on. It’s again this NSA push of having more information on more Americans," Duffy said.
"We know in politics, oftentimes people will sample data, to see what the president’s approval rating is or disapproval rating is. The CFPB could do the same thing to find out information about financial transactions. But instead of sampling data, they’re actually collecting it and storing it for up to 10 years. This is absolutely crazy."
So, Duffy’s claim is that the Consumer Financial Protection Bureau collects and monitors financial information of millions of Americans, without their knowledge, and stores it for up to 10 years -- the implication being that bureau is keeping data on individuals’ personal accounts.
Let's do some information gathering of our own.
What CFPB does
The Consumer Financial Protection Bureau, which launched in July 2011, is charged with protecting consumers from abusive practices in financial services and regulating the terms of mortgages, student loans, credit cards and other transactions.
"We gather and analyze available information to better understand consumers, financial services providers and consumer financial markets," the bureau says.
For example, a bureau report in June 2013 found that overdraft penalties represent well over half of banks' fees from consumer checking accounts,
The law creating the bureau prohibits it from collecting data "for purposes of gathering or analyzing the personally identifiable financial information of consumers."
But that doesn’t personally identifiable information isn’t being collected.
Suspicion about the bureau’s work ratcheted up in April 2013 when Bloomberg News reported it was demanding records from banks and was buying anonymous information about at least 10 million consumers from various companies.
The article said the bureau was paying the Experian credit-monitoring company up to $8.4 million to provide data on 5 million to 10 million consumers. The bureau was also buying auto loan information from the company and payday loan data from another credit-reporting company, the article said.
Duffy spokeswoman Cassie Smedile also pointed out that the bureau’s April 2013 strategic plan says the bureau will "acquire and maintain a credit card database at the summary and loan levels covering approximately 80 percent of the credit card marketplace."
So, the first part of Duffy’s claim is accurate. The Consumer Financial Protection Bureau is obtaining from third parties financial data involving millions of Americans without any direct notification from the bureau to consumers.
But what about the rest of Duffy’s message, which suggests the bureau keeps financial data on actual individuals, monitors it and stores it for up to 10 years?
Bureau makes its case
A week before Duffy made his claim, the House Subcommittee on Financial Institutions and Consumer Credit held a hearing specifically to examine how the Consumer Financial Protection Bureau collects and uses consumer data. Duffy is a member of the committee.
The bureau’s acting deputy director, Stephen Antonakes, testified that the bureau’s data collection on individuals is very limited.
The bureau collects personally identifiable information only when consumers are seeking help with a complaint against a business, he said, or when "we're using our supervisory tool, conducting examinations of the banks, the credit unions and the nonbanks under our jurisdiction."
When Duffy asked about news indicating the bureau was buying information about at least 10 million consumers, Antonakes replied: "Congressman, we're not monitoring any individual American. We're collecting broad data on markets to understand how varied markets work."
At the same time, Antonakes said he didn’t know how many millions of Americans were involved in the data the bureau has collected. And he said the bureau needs years’ worth of complete data, not a sampling of data like pollsters might use, to do its work.
We asked Duffy’s spokeswoman for evidence that the Consumer Financial Protection Bureau was monitoring data on individual Americans and storing it for up to 10 years.
She cited a July 2013 lawsuit filed against the bureau by a firm that says it is fighting the bureau’s demand for "thousands of personally identifiable" financial documents of individuals considering bankruptcy. The documents contain data such as names, addresses, phone numbers, amount of debt owed and creditor information, the firm alleges in a news release in which Duffy is quoted.
Duffy’s spokeswoman also cited a contract -- revealed by the Judicial Watch conservative group, which litigates on public corruption and other issues -- that the Consumer Financial Protection Bureau has with a firm to store and analyze credit card information.
The firm can get access to "non-public confidential information and personally identifiable information," the contract says, although the firm is barred from disclosing any of the data to any third party without permission from the bureau. The contract also states that "most if not all" of the data the firm will handle will be "confidential supervisory information," but that some records will contain sensitive, personally identifiable information.
Judicial Watch has published documents from the Consumer Financial Protection Bureau showing the bureau wants to track the financial records of 5 million Americans.
The bureau acknowledged the program and said all data collected is "anonymized," according to a U.S. News & World Report article.
We put Duffy’s claim to Bradley Jansen, director of the Center for Financial Privacy and Human Rights in Washington, D.C., which says it defends privacy, civil liberties and market economics, and Florida attorney Justin Angelo, who represents banks and other businesses that are regulated by the Consumer Financial Protection Bureau.
They agreed the bureau has collected and is monitoring financial data involving millions of Americans, but that’s not the same as monitoring the financial activity of individuals.
They also agreed it’s likely the bureau cannot collect all of the data it does without obtaining personally identifiable information in the process, even if the data is not being collected for that reason.
How the bureau is collecting data and safeguarding it will be the focus of a government audit.
On July 12, 2013, three days after the House subcommittee hearing on the bureau’s data collection practices, the U.S. Government Accountability Office agreed to review the bureau’s collection and analysis of credit records.
U.S. Sen. Mike Crapo, R-Idaho, who requested the review, says some of the bureau’s contracts with third-party data collectors would enable the bureau to monitor an individual consumer’s financial activity on a monthly basis.
But Crapo has also said the GAO review is needed because it’s unclear what personally identifiable information is being kept by the bureau. He said: "While CFPB officials have stated the CFPB is not collecting personally identifiable information, we do not know what information it collects, on how many accounts, or how this information is being used. We also need to know whether the CFPB is truly not collecting personally identifiable information from the data it is collecting or purchasing."
It’s worth noting that when Crapo raised similar concerns two months earlier, bureau director Richard Cordray responded in part by saying that while the bureau is creating a national mortgage database with "loan-level" data, and had bought 10 years of credit data representing 4 percent of Americans, none of that data contains personally identifiable information.
Invoking the surveillance activities of the National Security Agency, Duffy said the federal Consumer Financial Protection Bureau is "collecting financial information, monitoring financial information of millions of Americans" without their knowledge and "storing it for up to 10 years."
The implication was that bureau is keeping data on millions of individuals’ personal accounts.
The bureau is collecting information, even 10 years’ worth of some data, involving millions of Americans. That’s being done through third parties without consumers’ knowledge
But even a critic who has made claims similar to Duffy’s, in asking for a review of the bureau, says he doesn’t know what information the bureau collects and whether it contains personally identifiable information.
For a statement that is partially accurate but leaves out important details, we give Duffy a Half True.
Wall Street Journal Opinion Journal, U.S. Rep. Sean Duffy interview, July 17, 2013
PolitiFact, "Are Americans being ‘targeted’ for surveillance?" July 2, 2013
New York Times, "Vote ushers in new era in oversight of lending practices," July 16, 2013
The Daily Caller, "Consumer Financial Protection Bureau compared to NSA," June 26, 2013
Bloomberg News, "U.S. amasses data on 10 million consumers as banks object," April 17, 2013
U.S. Rep. Sean Duffy, news release, July 9, 2013
U.S. House Financial Services Committee, memo on July 9, 2013, subcommittee hearing, July 3, 2013
House Subcommittee on Financial Institutions and Consumer Credit, video of hearing, July 9, 2013 (Testimony of bureau’s acting deputy director Stephen Antonakes testimony begins about halfway into video)
Federal News Service, transcript (subscription) of House Subcommittee on Financial Institutions and Consumer Credit hearing, July 9, 2013
U.S. News & World Report, "GAO reviewing CFPB’s use of 5 million Americans’ financial records," July 18, 2013
U.S. News & World Report, "CFPB accused of targeting 5 million Americans for ‘warrantless’ financial surveillance," June 27, 2013
Wall Street Journal, "Watchdog to probe consumer bureau’s data protection," July 18, 2013
Congressional Research Service, "The Dodd-Frank Wall Street Reform and Consumer Protection Act: Title X, the Consumer Financial Protection Bureau," July 21, 2010
Email interview, U.S. Rep. Sean Duffy spokeswoman Cassie Smedile, July 22, 2013
Email interview, U.S. Government Accountability Office public affairs managing director Charles Young, July 23, 2013
Consumer Financial Protection Bureau, "The CFPB strategic plan, budget and performance plan and report," April 2013
Consumer Financial Protection Bureau, Richard Cordray letter to Sen. Mike Crapo, May 23, 2013
Huffington Post, "Banks and stores, not CFPB, spy on consumers," July 15, 2013
Interview, Center for Financial Privacy and Human Rights director Bradley Jansen, July 23, 2013
Morgan Drexen Integrated Systems, lawsuit news release, July 22, 2013
Interview, financial services litigation attorney Justin Angelo, July 24, 2013
U.S. Sen. Mike Crapo, transcript of Senate floor speech, July 16, 2013
U.S. Sen. Mike Crapo, news release on Government Accountability Office review, July 2, 2013
Interview, Senate Banking, Housing and Urban Affairs Committee staff member Mandi Critchfield, July 25, 2013
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