CFPB Statement Clarifies Credit Reporting And CARES Act

On April 1, 2020, as the nation was in the beginning stages of its COVID-19 shutdown and companies, including financial institutions, encountered operational challenges, the CFPB released a statement on supervisory enforcement regarding the Fair Credit Reporting Act (FCRA) and the CARES Act (the “Statement”). In discussing investigating disputes, the CFPB recognized the operational disruptions taking place that could affect a furnisher’s ability to respond to disputes within the timeframes provided by the FCRA and implied that it would consider a furnisher’s good faith efforts to comply even if the deadlines to investigate and respond to disputes were not strictly met. Given the national emergency, the CFPB indicated that it would look at several factors before taking enforcement action.

Although the Statement did not appear to be political, almost immediately after it was issued, several attorneys general, other politicians, and former director Richard Cordray chastised the CFPB for not strictly enforcing the statutory time periods in the FCRA. Their contention was that now more than ever, consumers needed the protections offered by the CFPB. This criticism did not account for the operational difficulties faced by furnishers and appears to have been based upon a belief that the Statement signaled an intention by the CFPB to forego enforcement of the FCRA, rather than merely a recognition that furnishers should not be penalized for making a good faith effort to overcome initial operational limitations.

Responding to this criticism and questions that have arisen largely from furnishers trying to navigate credit reporting under the CARES Act, on June 16 the CFPB issued “Consumer Reporting FAQs Related to the CARES Act and COVID-19 Pandemic.” The CFPB clarified that it expects all furnishers to make good faith efforts to investigate disputes quickly and within the statutory time frame. However, it reiterated that it will consider individual circumstances that consumer reporting agencies and furnishers face due to COVID-19 in deciding whether to take enforcement action. FULL ARTICLE