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Equifax Data Breach Evidence that Congress Should Deregulate Credit Reporting

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Competitive Enterprise Institute Vice President Jim Harper commented on the Equifax data breach.

“When Congress passed the Fair Credit Reporting Act forty-five years ago, it set up the credit reporting industry we have today and the incentives that industry follows. The credit reporting industry is cartelized, with little competition or innovation. But more importantly, when credit bureaus do things that harm consumers, they’re insulated from common law liability. Because the FCRA preempted state common law, consumers have fewer rights to sue. Equifax in turn likely hasn’t taken the care it should have to protect consumers from the harms that may arise from breach of data about them.

“If there is a lesson from the Equifax breach, it is that Congress should deregulate the credit reporting industry and withdraw the immunity that it gave to credit bureaus. When companies are spurred by competition, credit reporting will improve and consumers will benefit financially. When credit reporters know that they will have to pay out for any harms they cause consumers, their efforts to protect consumers will increase.”