On April 1st, the Consumer Financial Protection Bureau (“CFPB”) released a policy statement setting forth financial institutions’ obligations during the COVID-19 pandemic. In addition to providing clarity regarding the recently-enacted Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), the CFPB’s pronouncement outlines a flexible approach towards credit reporting agencies and furnishers who, despite good-faith efforts, have had difficulty complying with Fair Credit Reporting Act (“FCRA”) requirements during the crisis.
"the current crisis . . . 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."
In its statement, the CFPB acknowledged that COVID-19 threatens the entire consumer credit market; while consumers struggle financially, “the current crisis . . . 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.” Accordingly, the CFPB stated that it would “exercise [a] flexible supervisory and enforcement approach” during the pandemic, and provided two examples.
First, despite recent calls by some lawmakers for credit reporting agencies to stop reporting missed payments until the end of the COVID-19 outbreak, the CFPB instead “encourage[d] [financial institutions] to continue furnishing information despite the current crisis.” While reminding furnishers that the CARES Act requires them to report borrowers’ accounts as current where furnishers have granted payment accommodations (for instance, by entering into forbearance agreements), the CFPB assured financial institutions that it would not cite or take enforcement actions against companies that furnish accurate information about the payment relief measures provided to borrowers.
"the CFPB said that it would relax the normal dispute investigation deadlines of 30 to 45 days and not cite or take enforcement actions against companies for making “good faith efforts to investigate disputes as quickly as possible."
Second, the CFPB indicated that it would show lenience to companies that deviated from the dispute procedures mandated by the FCRA. Recognizing the “significant operational disruptions” faced by consumer reporting agencies and furnishers, the CFPB said that it would relax the normal dispute investigation deadlines of 30 to 45 days and not cite or take enforcement actions against companies for making “good faith efforts to investigate disputes as quickly as possible.” Further, the CFPB called attention to pre-existing FCRA provisions that eliminate the obligation of companies to investigate altogether, such as where the dispute comes from a credit repair organization or the dispute is reasonably concluded to be irrelevant or frivolous.
The CFPB’s policy statement provides valuable guidance and peace of mind for financial institutions. Furnishers and credit reporting agencies can expect that good-faith attempts to comply with the FCRA and the CARES Act are much less likely to be met with regulatory action; perhaps most importantly, the CFPB appears to have relaxed the normal investigation deadlines, allowing financial institutions leeway in tackling staffing and resource constraints. In sum, this policy statement indicates that the CFPB will likely continue to take a creditor-friendly approach to enforcement during the pandemic in an effort to keep the consumer credit market active.