ARLINGTON, Va. — Concerns about the volume of credit data
gathered by the Consumer Financial Protection Bureau along with potential that
information could be compromised were raised again by a former staff attorney at
the Securities and Exchange Commission, who saw the exact incident happen at that
regulatory agency.

In a commentary published through her new post at George
Mason University, senior research fellow Hester Peirce recapped how she
recently received a warning letter from the SEC that her personally
identifiable information, along with that of some other commission employees,
has potentially been compromised.

Peirce indicated the letter revealed that her data was
discovered on the computer network of another government agency. Peirce no
longer works at the SEC. She is now part of George Mason's Mercatus Center,
which describes itself as a university-based research center looking to advance
knowledge about how markets work to improve people's lives and apply economics to
offer solutions to society's most pressing problems.

In a post on the center's website, Peirce shared what part
of that letter from the SEC said.

 "[T]he origin of the
data was an upload from an employee's thumb drive … the employee formerly
worked at the SEC and, upon departure from the SEC, inadvertently and unknowingly
downloaded the SEC personnel data to the thumb drive. The employee had thought
he was downloading templates to help him in his future work for the government,"
that letter said.

In light of her personal experience, Peirce connected what
might happen to scores of consumers who are having their information collected
and housed by the CFPB.

"The CFPB's data collection efforts are troubling, despite
its efforts to mollify Congress at the recent hearing. The CFPB is compiling a
database of loan-level data, but the agency maintains it will take steps to
ensure the data cannot be tied to a particular borrower by name," Peirce said.

"The CFPB also has 4 percent of consumers' credit records
going back 10 years, yet this information is purportedly not linked to a named
individual. Moreover, the CFPB seems to think that the fact that other
regulators have been collecting similar data should be reassuring," she
continued.

"The CFPB collects very detailed information about
customers, such as credit card account information, directly from the firms it
regulates. But once again, the public is not to worry; according to the
bureau's testimony, ‘it does not analyze data that includes personal
identifiers,'" Peirce went on to say.

Peirce then pinpointed what she might fear most about the
entire situation.

"The fact is, the CFPB does have some personally
identifiable data and — using a little bit of elbow grease or the computer
wizardry of its Generation Y workforce — can probably tie a named consumer to
the allegedly unidentifiable data it has," she said.

"This task will be made easier if, as the U.S. Chamber of
Commerce suggests, the CFPB is executing a plan to require banks to catalogue
the consumer data they provide to the bureau according to individual
identifiers," Peirce added.

What does all of that potential mean, especially as dealers
and lenders are becoming increasingly more aware of vehicle financing
compliance in light of the CFPB entering the regulatory world? Peirce makes a
projection.

"The government, like any other human organization, will
inevitably be subject to data breaches. That is why we ought to be awfully sure
that regulators really need data before we start handing it over to them," she
said.

Peirce's entire commentary titled, "The Government Has Your Data at Its Fingertips," can be found here.

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