April 7, 2022

CFPB: New Proposed Rule Seeks to Halt Negative Credit Reporting for Survivors of Human Trafficking

Proposed rule will aid survivors seeking to open bank accounts, access credit, and gain employment

Today, the Consumer Financial Protection Bureau (CFPB) is using its rulemaking authority to propose that consumer reporting agencies (CRAs) do not prevent survivors of human trafficking from achieving financial independence. The proposed rule would protect survivors of human trafficking by preventing CRAs from including negative information resulting from abuse. Congress required the CFPB to issue rules as part of the recently-enacted Debt Bondage Repair Act.

“As survivors of human trafficking go through the recovery process, they shouldn’t be penalized for abuse they have endured,” said CFPB Director Rohit Chopra. “The CFPB’s proposal will help ensure that survivors can work to rebuild their lives, including accessing credit, opening a bank account, and finding a job.”

In December 2021, President Biden signed the Debt Bondage Repair Act into law. The Debt Bondage Repair Act prohibits CRAs from providing consumer reports that contain any negative item of information about a survivor of trafficking from any period the survivor was being trafficked. Congress required the CFPB to use its rulemaking authorities to implement the Debt Bondage Repair Act through rule changes to Regulation V, which ensures consumers’ credit information is fairly reported by CRAs.

Human trafficking exists across the U.S. and affects hundreds of thousands of victims and families. While there are no good estimates for the number of victims being trafficked in the U.S., in 2020 alone, one victim support organization received over 50,000 contacts.

Victims of trafficking are forced to engage in commercial sex work or to work in other legal and illicit sectors, including hospitality, agriculture, janitorial services, construction, landscaping, restaurants, factories, adult dependent and child care, salon and massage services, retail services, fairs and carnivals, peddling and begging, drug smuggling and distribution, and domestic work.

While being trafficked, many victims suffer from financial abuse, which is a common tactic used by traffickers to further exploit victims. Survivors and support organizations report that traffickers employ financial abuse as a means to earn money and as a method of control. After destroying their victims’ credit history and racking up charges in their names, traffickers know their victims will be unable to rent an apartment, purchase a car to go to work, or even find a job with a living wage.

The consequences of financial abuse often follow survivors as they attempt to rebuild their financial lives. Specific consequences include:

The CFPB is taking steps to help survivors take back control of their financial lives and participate in all aspects of the economy through its Notice of Proposed Rulemaking to implement the Debt Bondage Repair Act. The CFPB is proposing a rule that, if enacted, will include guidelines to:

Read today’s Notice of Proposed Rulemaking. 

The Notice will be published in the Federal Register on Friday, April 8, 2022. The public comment period will close on Monday, May 9, 2022.

To access additional resources on recognizing the signs of human trafficking, identifying victims, and reporting suspected trafficking, please visit the Department of Homeland Security’s Blue Campaign .

This post was originally published here.