The CFPB has issued a policy statement concerning COVID-19 considerations that will be relevant to how the CFPB chooses to exercise its supervisory and enforcement authority regarding compliance with the Fair Credit Reporting Act and Regulation V, especially in light of the CARES Act.
The CFPB states that it “understands that the current crisis impacts the financial well-being of consumers and poses operational challenges for consumer reporting agencies and furnishers, including staffing challenges, that could temporarily impede their ability to timely comply with their statutory and regulatory consumer reporting obligations.” The policy statement is intended to “inform [CRAs] and furnishers of the Bureau’s flexible supervisory and enforcement approach during this pandemic regarding compliance with the [FCRA] and Regulation V.” The CFPB also states that it “intends to consider the circumstances that entities face as a result of the COVID-19 pandemic and entities’ good faith efforts to comply with their statutory and regulatory obligations as soon as possible.”
The CFPB gives the following “examples of the flexibility [it] intends to provide in the consumer reporting system”:
- In contrast to legislation that has been introduced calling for credit reporting to be halted in response to the COVID-19 pandemic, “the Bureau encourages [furnishers] to continue furnishing information despite the current crisis.” The Bureau also references the CARES Act section that amends the FCRA to require a furnisher that makes an accommodation with respect to one or more payments on a credit obligation or consumer account that was not already delinquent to continue to report the account as current if the consumer fulfills the terms of the accommodation. It then observes that many furnishers will be offering payment accommodations either as required by the CARES Act or voluntarily and that such accommodations “will avoid the reporting of delinquencies resulting from the effects of COVID-19.” The Bureau affirms its support for “furnishers’ voluntary efforts to provide payment relief” and indicates that it does not intend to cite in an exam or take enforcement action against “those who furnish information to [CRAs] that accurately reflects the payment relief measures they are employing.” This presumably means that although the FCRA, as amended by the CARES Act requires a furnisher to continue to report an account as current when a consumer fulfills the terms of an accommodation, the Bureau will not fault a furnisher for reporting accurate information that reflects the accommodation (such as the amount of a reduced payment or that no payment was made).
- With regard to the FCRA’s required timeframes for a CRA or furnisher to investigate a consumer’s dispute, the CFPB states that it is aware that some CRAs and furnishers “may face significant operational disruptions that pose challenges for them in investigating consumer disputes [within the timeframes],” such as “significant reductions in staff, difficulty intaking disputes, or lack of access to necessary information.” The CFPB states that it will consider a CRA’s or furnisher’s “individual circumstances” and that it does not intend to cite in an exam or bring an enforcement action against a CRA or furnisher “making good faith efforts to investigate disputes as quickly as possible, even if dispute investigations take longer than the statutory framework.” It also reminds CRAs and furnishers that they can take advantage of “statutory and regulatory provisions that eliminate the obligation to investigate disputes by credit repair organizations and disputes they reasonably determine to be frivolous or irrelevant” and indicates that the CFPB will “consider the significant current constraints on furnisher and consumer reporting agency time, information, and other resources in assessing if such a determination is reasonable.” (Despite the supervisory or enforcement relief offered by the CFPB, CRAs and furnishers could still face consumer litigation alleging FCRA violations based on compliance failures that occur in the wake of the COVID-19 pandemic. However, we are hopeful that the CFPB’s policy statement will be helpful in defending a claim that a violation of the dispute investigation timeframes was willful, giving rise to statutory damages.)
While the policy statement is certainly welcomed by CRAs and furnishers, members of the consumer financial services industry face similar operational challenges as a result of the COVID-19 pandemic in complying with numerous other statutory and regulatory requirements for which the CFPB examines them for compliance and as to which the CFPB has enforcement authority. We hope the CFPB intends to also be flexible in its supervisory and enforcement practices regarding such other requirements and will soon provide additional guidance to industry.