In order to provide greater insight into economic trends and consumer habits, the Consumer Financial Protection Bureau has announced plans to monitor up to four out of five credit card transactions over the next twelve months. It will gather this information through a controversial data-mining program that has been in place for several months.
Data suggests that more than one billion credit cards were used in 2012 and amounted to a total number of 53 billion transactions. This means that the Consumer Financial Protection Bureau will seek to monitor more than 40 billion transactions from more than 900 billion credit cards this year.
This announcement has created much discussion and debate throughout the industry and in the halls of Congress. Several Congressional representatives – all of whom are Republican – have lambasted the agency's attempts to monitor credit card usage as a form of intrusive government. Defenders of the program have stated that this data-mining and monitoring program has already been in existence for some time through more than 100 different banks around the country. Some legal issues have been raised in regards to the program's collection of bankruptcy data, which may or may not be legal under rules set forth by the US Trustee Program.
While many worry about the implications that may come with such data collection and analysis, the regulatory measures that created the Consumer Financial Protection Bureau prohibit the agency from collecting any information that can be used to personally identify an individual. While spending habits and purchases could be analyzed, these expenditures would not be associated with a particular person.
The primary motivation behind the agency's desire to collect this information is to be on the lookout for unscrupulous financial activities that can put consumers at risk and to further understand developing market trends.
Another issue for those who dissent with this approach is the fact that the CFPB has already been engaged in this activity with no prior criticism. The desire to raise the number of inspected credit transactions – 80% - is only slightly higher than the 77 percent of credit card transactions inspected and evaluated by the agency in 2012.