The Consumer Financial Protection Bureau (CFPB) has taken a significant step towards protecting Americans' personal data by proposing a new rule that would block data brokers from selling sensitive information, including Social Security numbers and phone numbers, under the Fair Credit Reporting Act (FCRA).

The proposed rule, announced on Monday, aims to "rein in" data brokers who have been sidestepping federal law by claiming they are not subject to the FCRA's provisions. According to CFPB Director Rohit Chopra, the rule would "curtail the widespread evasion" of the FCRA and make it clear that many data brokers, such as credit bureaus and background check companies, are subject to federal protection under the FCRA.

The move comes at a time when data brokers are facing increasing scrutiny for profiteering from selling access to vast amounts of Americans' personal information, often with little regard for data security. Chopra warned of the "staggering" problem caused by data brokers who are "making this data available to anyone willing to pay a price."

Under the proposed rule, data brokers would be treated the same as credit bureaus and background check companies, or any other company that sells data about income or credit scores, histories, and debt payments, which are already subject to the FCRA. The rule would also limit data brokers from selling information that can identify individuals, such as Social Security numbers and phone numbers, which would be covered under the FCRA going forward.

Chopra emphasized that the proposed rule is a "major step forward" to ensure that companies trafficking in Americans' most sensitive information face real consequences for violating long-standing law and putting people and the country at risk.

The CFPB's proposal is seen as a significant step towards protecting Americans' personal data, particularly in the absence of nationwide data protection laws. The United States is currently the only Western democracy without such laws, despite the FCRA being passed in 1970.

The proposed rule will be open for public comment in the Federal Register until early March 2025. However, its fate remains uncertain under the incoming Trump administration, which has promised widespread deregulation across the U.S. government. While CFPB officials declined to speculate on the rule's chances of survival, they noted that there is "broad bipartisan recognition that data brokers pose real dangers."

The proposed rule has significant implications for the data brokerage industry and could pave the way for stronger data protection laws in the United States. As the public comment period begins, it remains to be seen how the industry will respond and whether the rule will ultimately be implemented.