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Samantha: Hello, this is Samantha Shares.

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This episode covers the Fair Credit
Reporting Act; Preemption of State Laws.

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The following is an audio
version of that document.

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This podcast is educational
and is not legal advice.

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We are sponsored by Credit Union
Exam Solutions Incorporated, whose

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forty years of National Credit

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We assist our clients with N C
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If you are worried about a recent,
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examination, reach out to learn how they
can assist at Mark Treichel DOT COM.

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Also check out our other podcast called
With Flying Colors, where we provide tips

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on how to achieve success with N C U A.

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And now, the Fair Credit Reporting
Act; Preemption of State Laws.

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The Consumer Financial Protection Bureau
is issuing this interpretive rule to

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clarify that the Fair Credit Reporting
Act broadly preempts state laws that

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attempt to regulate credit reporting.

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This action reflects Congress’s original
intent to create national standards

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for the credit reporting system.

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This interpretive rule replaces
an earlier Bureau rule from July

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twenty twenty-two, which had taken
a narrower view of preemption.

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That rule was withdrawn
in May twenty twenty-five.

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The Fair Credit Reporting Act, or F C R
A, was enacted in nineteen seventy and

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has been amended several times since.

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It established a national system
for credit reporting and set

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rules for consumer reports and
the use of consumer information.

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From the beginning, the law
preempted state laws that were

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inconsistent with its provisions.

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In nineteen ninety-six, Congress
strengthened this preemption by

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adding a new clause that barred
states from regulating in certain

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specifically identified areas.

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This was meant to avoid a
patchwork of conflicting rules.

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Originally, this stronger preemption
was set to expire in two thousand

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four, but in two thousand three,
Congress made it permanent.

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The intent was clear: to preserve uniform
national standards and support the growth

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of the national credit reporting system.

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In July twenty twenty-two, the
Bureau published an interpretive

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rule suggesting that section sixteen
eighty-one tee, subsection b,

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paragraph one, had only a narrow sweep.

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It concluded that many state laws
affecting consumer reports could

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stand alongside federal law.

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For example, it suggested that
state laws regulating medical debt,

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rental history, or arrest records
could coexist with the F C R A.

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That interpretation was controversial.

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In May twenty twenty-five, the Bureau
withdrew that interpretive rule,

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stating that it was unnecessary and
that agencies lack special authority

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to interpret preemption unless
Congress specifically delegates it.

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The Bureau also found that the twenty
twenty-two rule created confusion and

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risked imposing higher compliance burdens.

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The Bureau now clarifies that the
prior interpretation was flawed.

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The F C R A’s preemption clause
was written in broad terms

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and must be applied broadly.

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The text of section sixteen eighty-one
tee, subsection b, paragraph one, uses

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sweeping language: “No requirement
or prohibition may be imposed under

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the laws of any State with respect
to any subject matter regulated

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under” certain provisions of the Act.

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Congress deliberately used
expansive phrases like “no

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requirement or prohibition,” “with
respect to,” and “relating to.”

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Read together, these show that
Congress meant to occupy the

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field of consumer reporting.

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The legislative history
supports this interpretation.

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In the nineteen ninety-six amendments,
lawmakers stressed the need for

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a uniform national credit system.

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In two thousand three, Congress decided
to make preemption permanent, concluding

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that the national credit reporting
system had expanded access to credit,

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lowered costs, and accelerated decisions.

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Allowing states to impose their own
requirements would fracture the system,

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increase compliance costs, and undermine
the usefulness of credit reports.

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Consumers would no longer be
able to take their credit history

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with them as they moved, and
lenders would struggle to compare

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creditworthiness across state lines.

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The Bureau emphasizes that state
laws attempting to regulate core

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areas of credit reporting—such as
prescreening, dispute procedures,

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adverse action notices, or the content
of consumer reports—are preempted.

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State efforts to ban certain categories
of information, such as medical debt

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or rental arrears, are also preempted.

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The Bureau explains that rules about how
long information may remain on a report

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and whether it may appear in the first
place are points on the same continuum.

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Allowing states to prohibit
categories outright would

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contradict Congress’s intent.

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For the financial services
industry, the rule restores clarity.

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Credit bureaus, lenders, and providers
of consumer information can look

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to federal law as the governing
standard without having to reconcile

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fifty different state regimes.

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For consumers, the effects are mixed.

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A national standard supports broader
access to credit and ensures consistency.

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But some advocates will argue
that state-level protections,

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particularly around medical
debt, are now off the table.

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This interpretive rule is guidance.

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It does not have the force of law.

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Courts remain the final arbiters
of preemption questions.

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Still, the Bureau’s position is
clear: Congress intended broad federal

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preemption under the Fair Credit
Reporting Act, and the national

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credit reporting system depends on it.

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This concludes the Fair Credit
Reporting Act; Preemption of State Laws.

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If your credit union could use assistance
with your exam, reach out to Mark Treichel

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on LinkedIn, or at Mark Treichel DOT COM.

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This is Samantha Shares, and
we thank you for listening.