On April 1, 2020, the Consumer Financial Protection Bureau (“CFPB”) released a statement on “Supervisory and Enforcement Practices Regarding the Fair Credit Reporting Act and Regulation V in Light of the CARES Act.” This statement provides guidance outlining the CFPB’s expectations of furnishers and consumer reporting agencies (“CRAs”) during the COVID-19 pandemic, and signals that the CFPB will take a flexible supervisory and enforcement approach to compliance with the Fair Credit Reporting Act (“FCRA”) and its implementing regulation, Regulation V.
The key points of the CFPB’s guidance are discussed below.
Furnishing Consumer Information
In the statement, the CFPB reiterated its prior guidance, which urged lenders to meet customers’ financial needs during COVID-19, and encouraged lenders to continue reporting accurate customer information, notwithstanding these accommodations.
The CFPB emphasized that it expects all lenders to comply with section 4021 of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). This section of the CARES Act amends the FCRA to require that, if furnishers make an accommodation on a credit obligation or account of a consumer and the consumer meets their new obligation, the furnisher must report the credit obligation or account as current. The CFPB also signaled that it would work with furnishers as needed to achieve compliance with this new provision.
The CFPB also reiterated its support for lenders’ voluntary efforts to provide payment relief, and it indicated that lenders’ continued accommodations to borrowers affected by COVID-19 will avoid the reporting of delinquencies. Importantly, the CFPB stated that “it does not intend to cite in examinations or take enforcement actions against those who furnish information to [CRAs] that accurately reflects the payment relief measures they are employing.”
Some additional clarification may be necessary as section 4021, for accommodations on accounts that are already delinquent, requires the furnisher to “maintain” the delinquency status during the accommodation period. That could pose operational challenges for furnishers because delinquency reporting typically advances the status from 30 to 60 to 90-days delinquent as a delinquent account ages toward charge-off. As a result, some financial institutions may find that they cannot continue to offer certain accommodations to delinquent borrowers if they cannot align their delinquency reporting with the reporting requirements of the CARES Act.
Flexibility in Investigating Disputes
The guidance also indicates that the CFPB will “consider a [CRA] or furnisher’s individual circumstances and does not intend to cite in an examination or bring an enforcement action against a [CRA] or furnisher making good faith efforts to investigate disputes as quickly as possible, even if the dispute investigations take longer than the statutory timeframe.” The FCRA generally requires CRAs and furnishers to investigate disputes within 30 days. In the statement, the CFPB recognized that COVID-19 may cause significant operational disruptions that create difficulties in investigating disputes.
The guidance also encouraged CRAs and furnishers to take advantage of existing regulatory provisions that allow them to forego investigations of disputes from credit repair organizations where the CRA or furnisher determines the dispute to be frivolous or irrelevant. The CFPB stated that it will consider the current COVID-19 pandemic, and resulting difficulties, in determining the reasonability of a CRA or furnisher’s conclusion that a dispute is frivolous or irrelevant.