On April 1, the Consumer Financial Protection Bureau issued “a non-binding general” policy statement regarding the Fair Credit Reporting Act (“FCRA”) and Regulation V in light of the recently enacted Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The policy statement primarily emphasizes the need for furnishers to follow the requirements of the CARES Act to report as current certain loans subject to payment accommodations due to the coronavirus (“COVID-19”) pandemic. The policy statement further outlines the CFPB’s intent to provide regulatory relief by not enforcing the FCRA’s statutory investigation timeframe against furnishers or consumer reporting agencies acting in good faith.
Meeting CARES Act’s New FCRA Requirements
While the policy statement emphasizes prior guidance instructing financial institutions to help consumers and further encourages companies to continue acting as furnishers, the CFPB’s latest policy statement focuses primarily on reminding furnishers of their new obligations under the CARES Act. Specifically, it reminds furnishers that the FCRA now requires them to “report as current certain credit obligations” subject to COVID-19 payment accommodation plans. It further states that the CFPB “expects furnishers to comply with the CARES Act and will work with furnishers as needed to help them do so.”
Regulatory Relief from FCRA Investigation Timeframe Requirements
In the second portion of the policy statement, the CFPB acknowledges that the pandemic presents some consumer reporting agencies and furnishers with operational challenges which may interfere with their ability to investigate disputes. Accordingly, the CFPB “will consider a consumer reporting agency’s or furnisher’s individual circumstances” when conducting an examination for compliance with the FCRA. To the degree it finds that the consumer reporting agency or furnisher is “making good faith efforts to investigate disputes as quickly as possible,” it “does not intend to cite in an examination or bring an enforcement action” for a failure to meet the FCRA statutory timeframe. For instance, the CFPB will not take any adverse enforcement or examination-related actions against a furnisher or a consumer reporting agency that does not meet the 30-day investigation requirement under the FCRA if it makes a good faith effort to investigate disputes as quickly as possible and its operations are affected by the COVID-19 pandemic. Moreover, if a consumer provides additional information that is relevant to the investigation of his or her dispute, and provides that information within 30 days of raising a dispute, furnishers and consumer reporting agencies will be allowed to investigate the dispute within 45 days of the dispute’s report date instead of 30 days.
In addition to the above, the CFPB appears to encourage furnishers and consumer reporting agencies to alleviate some operational stress by not “investigat[ing] disputes submitted by credit repair organizations and disputes they reasonably determine to be frivolous or irrelevant,” as permitted by applicable statutory and regulatory provisions. As a further means to encourage this behavior, the CFPB states that it “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.”
While the policy statement should be of some assistance to furnishers and consumer reporting agencies, they must not forget that the FCRA provides state regulators with the ability to enforce its provisions, and that it does not in any way change the ability of consumers to bring private litigation for alleged violations of either the FCRA or Section § 1692e(8) of the Fair Debt Collection Practices Act. However, the CFPB has provided guiding language that courts and state regulators should give deference to when evaluating the conduct of covered entities under the unique pressures caused by COVID-19. Just as the CFPB will “consider the significant current constraints on furnisher and consumer reporting agency time, information, and other resources in assessing if” a company made “good faith efforts,” so to must state regulators, the consumer/plaintiff’s bar and the courts. Thus, it is incumbent on every company to document its process in achieving the good faith efforts we all are making to adjust to the changes imposed on us by COVID-19. Any company experiencing practical complications in complying with the FCRA in light of the pandemic are encouraged to seek advice from counsel.