[FCRA] Unfair Attack?: 23 State AGs Blast CFPB’s COVID-19 FCRA Response—But is the Criticism Justified?

A coalition of 23 attorneys general are upset with the Consumer Financial Protection Bureau (“CFPB”). 

Really upset. 

On April 1, 2020, the CFPB issued a policy statement that it intended to relax certain oversight priorities during the current COVID-19 pandemic, and this sent the attorneys general into something of a panic.  Indeed, in a heated letter delivered to the CFPB, the coalition demanded the CFPB retract its position, enforce the law under the Fair Credit Reporting Act (“FCRA”) and not take perceived leniency on Credit Reporting Agencies (“CRAs”) and furnishers during the current pandemic.  But was the loud alarm justified?  Maybe not if one considers the whole picture and collaborative approach the CFPB has taken well before the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted to protect both consumers and credit reporting operations alike. 

Contrary to the attorneys general bold assertion that the “CFPB should get back to doing its job by immediately withdrawing its recent guidance and resuming vigorous oversight of consumer reporting agencies and enforcement of the FCRA”, other CFPB statements and actions show that the CFPB is actively engaged in balancing both consumer needs and oversight responsibilities during this on-going pandemic.  And at time like this, maybe flexibility and collaboration is not a bad idea.

On March 13, 2020, the President declared a national emergency due to COVID-19 pandemic.  Not long after, and before the CARES Act became law, the CFPB came together with four other agencies and issued an “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus” on March 22, 2020.   The goal of the statement was to encourage “financial institutions to work prudently with borrowers who are or may be unable to meet their contractual payment obligations because of the effects of COVID-19. The agencies view loan modification programs as positive actions that can mitigate adverse effects on borrowers due to COVID-19.”  Further, the agencies advised that “past due reporting with regard to loans not otherwise reportable as past due, financial institutions are not expected to designate loans with deferrals granted due to COVID-19 as past due because of the deferral.”

Then, on March 27, 2020, the CARES Act was enacted, which amended furnishers reporting obligations under the FCRA.  Namely, that if a furnisher makes payment relief or an accommodation with respect to an obligation, the furnisher shall report the credit obligation or account as current.  If the credit obligation or account was delinquent before the accommodation, the furnisher shall maintain delinquent status during the period in which accommodation is in effect.  But if a consumer brings the delinquent credit obligation or account current during period of accommodation, furnishers should report the credit obligation or account as current.  Seems pretty consistent with the interagency March 22, 2020 guidance.

Next, on April 1, 2020, the CFPB issued the contested policy statement.  In the press release that accompanied the policy statement, the CFPB affirmed that “[a]s lenders continue to offer struggling borrowers payment accommodations, Congress last week passed the CARES Act. The Act requires lenders to report to credit bureaus that consumers are current on their loans if consumers have sought relief from their lenders due to the pandemic. The Bureau’s statement informs lenders they must comply with the CARES Act. The Bureau’s statement also encourages lenders to continue to voluntarily provide payment relief to consumers and to report accurate information to credit bureaus relating to this relief. The continuation of reporting such accurate payment information produces substantial benefits for consumers, users of consumer reports, and the economy as a whole.”  In the actual April 1 policy statement, the CFPB offered the following guidance[1]:

The CARES Act, a section of which amends the FCRA, generally requires furnishers to report as current certain credit obligations for which furnishers make payment accommodations to consumers affected by COVID-19 who have sought such accommodations from their lenders.  The Bureau expects furnishers to comply with the CARES Act and will work with furnishers as needed to help them do so.

Many furnishers are or will be offering consumers affected by COVID-19 various forms of payment flexibility, including allowing consumers to defer or skip payments, as required by the CARES Act or voluntarily. Such payment accommodations will avoid the reporting of delinquencies resulting from the effects of COVID-19. The Bureau supports furnishers’ voluntary efforts to provide payment relief, and it does not intend to cite in examinations or take enforcement actions against those who furnish information to consumer reporting agencies that accurately reflects the payment relief measures they are employing.

The FCRA generally requires that consumer reporting agencies and furnishers investigate disputes within 30 days of receipt of the consumer’s dispute. The 30-day period may be extended to 45 days if the consumer provides additional information that is relevant to the investigation during the 30-day period.

The Bureau is aware that some consumer reporting agencies and furnishers may face significant operational disruptions that pose challenges for them in investigating consumer disputes . . . In evaluating compliance with the FCRA as a result of the pandemic, the Bureau will consider a consumer reporting agency’s or furnisher’s individual circumstances and does not intend to cite in an examination or bring an enforcement action against a consumer reporting agency or furnisher making good faith efforts to investigate disputes as quickly as possible, even if dispute investigations take longer than the statutory timeframe.

(Emphasis added).  Yet on April 13, 2020, a coalition of 23 attorneys general delivered the sharp letter to the CFPB demanding it enforce the law.  The attorneys general “oppose[d] [CFPB’s] recent announcement suggesting that (1) the CFPB will not enforce the CARES Act’s amendment to FCRA”, which “could discourage consumers from taking advantage of the forbearances and other accommodations that lenders are offering” and (2) “CFPB will no longer take enforcement or supervisory actions against consumer reporting agencies (CRAs) when they fail to investigate consumer disputes in a timely fashion . . . allowing CRAs to ignore the statutory 30-day timeline for investigating disputes puts consumers at risk”.  In all, “CRAs only have one job: to maintain accurate credit reports. Now is not the time to let them fall asleep at the switch. They must be vigilant and protect consumers’ credit. Especially during this crisis, we must hold them accountable when they fail to respond to, and correct, errors on consumers’ credit reports.” (Emphasis added).

As detailed above, the CFPB has put forward detailed information platforms, interagency guidance, and statements that promote lenders and consumers working together on necessary loan arrangements, and to fairly and accurately report those arrangements.  Indeed, the CFPB recently partnered with Federal Housing Finance Agency (FHFA) to establish the Borrower Protection Program, which allows the agencies to share servicing information to protect borrowers during the pandemic to include working efficiently through the consumer complaint process.  The “FHFA’s regulated entities provide more than $6.3 trillion in funding for the U.S. mortgage market” and “[t]he CFPB has taken numerous steps to protect and assist consumers during the COVID-19 national emergency including making it easier for consumers to receive pandemic-relief payments; informing consumers about their options as it relates to mortgage forbearance . . . [and] [t]he Bureau continues to process consumer complaints through the consumer compliant system. Through the consumer complaint system, the CFPB gets responses from companies to resolve consumer issues and takes the information into account in supervisory and enforcement work.”[2]  Maybe partnerships like this will alleviate some of the attorneys general concerns.

Further, contrary to attorneys generals letter, nowhere in CFPB’s April 1, 2020 policy statement did it say that it will “no longer take enforcement or supervisory action” against CRAs and furnishers that fail to investigate.  Instead, the CFPB made clear that it will not target enforcement efforts at those CRAs and furnishers that are making “good faith efforts” to investigate disputes, recognizing that with internal operational limitations (like a remote workforce), CRAs and furnishers alike (like the rest of America) experience unpredictable operational delays and disruptions at no fault of their own.  However, the CFPB still expects that CRAs and furnishers investigate disputes “as quickly as possible”.  Moreover, the notion that CRAs and furnishers are going to “ignore” their legal responsibilities or “fall asleep at the switch” discounts the brute force of agencies like FTC or the plaintiffs’ bar lurking around the corner, or, just maybe, that the CRAs and furnishers intend to do the right thing and make good faith efforts to investigate disputes in order to keep the credit market fair, accurate, and moving during such an unpredictable time. 

Needless to say, in a time when information is moving fast and a global pandemic is mid-stride, maybe a better use of strained resources is to collaborate and inform as opposed to a full frontal enforcement assault that would divert energy away from the main effort right now:  keeping the economy afloat.  When this settles, there will be plenty of enforcement actions to go around for states, federal agencies, and private litigants, and nobody should lose sight of that fact.


[1]  We need not ignore the litany of resources the CFPB has issued to promote consumers and lenders working together to maintain the credit reporting balance.  See, e.g., the CFPB Online Coronavirus Hub

[2] See, April 15, 2020 FHFA and CFPB Announce Borrower Protection Program, https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-and-CFPB-Announce-Borrower-Protection-Program.aspx (last accessed April 29, 2020).

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