State Attorneys General Urge CFPB to Enforce the CARES Act and Fair Credit Reporting Act

Twenty-one state Attorneys General, along with the AGs for Washington, D.C. and Puerto Rico, have sent a letter to the Consumer Financial Protection Bureau (CFPB or Bureau) urging withdrawal of CFPB’s guidance relaxing certain requirements of the Fair Credit Reporting Act (FCRA) during the COVID-19 pandemic.

On April 1, CFPB issued non-binding guidance to provide flexibility to the consumer reporting system. Examples from the guidance include:

• The FCRA generally requires that consumer reporting agencies and lenders investigate disputes within 30 days of receiving a consumer’s dispute. CFPB’s guidance states that in considering compliance with the requirement to investigate disputes within 30 days under FCRA, the Bureau will consider a consumer reporting agency’s or lender’s individual circumstances during the COVID-19 pandemic and “does not intend” to bring an enforcement action against a consumer reporting agency or lender making a “good faith effort” to investigate disputes “as quickly as possible.”
• The COVID-19 stimulus legislation—Coronavirus Aid, Relief, and Economic Security Act (CARES Act)—amended FCRA by requiring lenders to report as “current” certain credit obligations for which lenders make payment accommodations to consumers affected by COVID-19 who have sought such accommodations from their lenders.^[1] CPFB’s new guidance, however, provides that it does not intend to take enforcement actions against lenders who furnish information to consumer reporting agencies that “accurately reflects the payment relief measures they are employing.”

Commenting on CFPB’s guidance, the AGs’ letter first addresses CFPB’s announcement that it will not fully enforce the CARES Act’s requirements for reporting credit obligations as “current” where payment accommodations have been made. The AGs argue that lenders that comply with the CARES Act will “be at a competitive disadvantage to those that flout its furnishing requirements” and therefore will “harm both honest businesses and consumers.”

Second, the AGs argue that allowing consumer reporting agencies to ignore the statutory 30-day timeline for investigating disputes will put some consumers at risk. The AGs argue that during a significant economic downturn it is “incumbent upon” both CFPB and consumer reporting agencies to be “even more vigilant” in protecting consumers against “false and incorrect information on their credit reports that could prevent them from renting or buying a home” or purchasing a new car or opening a credit card account.

The letter points to the Pennsylvania Attorney General’s “CARE Package” program in which financial institutions have pledged to extend grace periods to borrowers and to refrain from furnishing of negative credit information from all types of consumer loans, not limited to federally-backed mortgages.

The state AGs’ letter goes on to argue that enforcing FCRA will help protect consumers from COVID-19 and stimulus scams.

Conclusion

State AGs continue to be very active on consumer protection matters during the COVID-19 pandemic. Even though they do not have authority to enforce federal laws and regulations, the AGs are using their offices to advocate for the federal policy and legal positions they prefer.

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^[1] Coronavirus Aid, Relief, and Economic Security Act, Pub. L. No. 116-136, § 4201 (2020).