Numerous Attorneys General Say They Will Enforce FCRA Investigation Timeframes if CFPB Will Not

By: Andrea Shaw

On April 1st the Consumer Financial Protection Bureau (“CFPB”) issued guidance in regard to the Fair Credit Reporting Act (“FCRA”). At a high level the guidance announced that:

1. Lenders should report as “current” any loans that are affected by a COVID-19 accommodation; and
2. The CFPB would not take action against consumer reporting agencies and furnishers that violate the FCRA 30-day deadline to investigate consumer disputes.

More than twenty state Attorneys General (“AG”) wrote to the CFPB expressing concern over the weakening of consumer protection standards during what is sure to be a challenging time for most consumers. Disappointed with the CFPB’s response, several AG’s have indicated their willingness to enforce the requirements.

Our review of the guidance is more conservative, and believe it reflects the CFPB acknowledging some businesses may be facing COVID related challenges to the strict timeframes within the FCRA and that they will be reasonable about it. The guidance should not be read as CFPB giving consumer reporting agencies and furnishers a free pass to delay in regard to investigating consumer complaints.

What Does This Mean For You?

First, in our view, the guidance should not be interpreted as the CFPB giving consumer reporting agencies and furnishers a free pass to drag their feet with respect to consumer complaint investigations. Rather, we read it simply as an acknowledgment by the Bureau that businesses may be facing many challenges during this unprecedented time and adhering to the strict timeframes set forth in the FCRA may not always be possible.

Although you can expect the CFPB to be reasonable under the circumstances, you should not assume that it will suspend enforcement. You should only miss the timeframes for investigations under the FCRA if circumstances related to the pandemic make it necessary. Document why taking longer to investigate was necessary, and be sure to include how the pandemic contributed to that need. Finally, be aware that just because the CFPB has indicated they are going to grant flexibility, there are many other regulatory agencies, including the AG’s referenced above, who may not, which means missing timeframes still results in potential regulatory exposure for your institution.

Even in light of the recent of CFPB guidance, make sure if your institution misses FCRA investigation timeframes you are doing it fully aware of all of the risks.

Bottom Line

The COVID-19 crisis is rapidly evolving and requiring businesses to adapt quickly to the legal, regulatory, economic, and community impacts. Our business law team is monitoring these developments in real time and we’re here to support and assist you as needed. Please do not hesitate to reach out if we can be helpful to you.