By Jon Hill

Law360 (September 24, 2020, 10:49 PM EDT ) Consumer advocates urged the Consumer Financial Protection Bureau on Thursday to get tougher about holding the credit reporting industry to legally mandated deadlines for investigating error disputes, arguing there's no good reason for continuing the regulatory lenience that the agency pledged at the outset of the coronavirus pandemic.

The CFPB said in April that it would temporarily refrain from going after companies for taking longer on dispute investigations than is allowed under the Fair Credit Reporting Act, a policy that the agency attributed to "significant operational disruptions" then facing the industry as a result of the pandemic.

But in a letter to CFPB Director Kathleen Kraninger, the National Consumer Law Center and other consumer groups called on the agency to rescind this policy, saying the continued accommodation can hardly still be needed nearly six months later and gives cover to delays that are causing hardship in the meantime.

"A search of the CFPB complaint database reveals that there has been a dramatic increase in complaints from consumers regarding delays in the processing of their disputes," the groups wrote. "Consumers have lodged over 13,000 complaints just in the past six months alleging that their disputes have not been addressed within the FCRA deadline, if addressed at all."

That works out to a 550% jump in the volume of such complaints compared to the same period in 2019, an increase that is "likely as a result of the CFPB guidance," according to the groups.

The letter also quoted from one complaint filed with the CFPB in August, in which a consumer alleged a credit reporting agency's dispute investigation slowness was holding up efforts to buy a house.

"These delays or even failure to process disputes are causing real and significant difficulties to American consumers," the groups wrote.

Credit bureaus and other consumer reporting companies have 30 days under the FCRA to investigate when a consumer disputes information on a credit report, though this timetable can be extended by another 15 days in some circumstances.

However, the CFPB said in credit reporting guidance released Apr. 1 that it recognized compliance with these deadlines could be difficult for companies experiencing staff shortages or other business interruptions because of the pandemic. As a result, the agency said it wouldn't take supervisory or enforcement action against companies that make "good faith efforts to investigate disputes as quickly as possible, even if dispute investigations take longer than the statutory timeframe."

But the consumer groups argued in their letter Thursday that the CFPB should either scrap that part of the guidance or, at most, allow credit reporting companies to have only an additional 15 to 30 days, saying the industry has had enough time at this point to adapt to the challenges posed by the pandemic.

"There should no longer be a pressing need for relaxing statutorily mandated deadlines due to 'reductions in staff, difficulty intaking disputes, or lack of access to necessary information,'" the groups wrote, quoting from the guidance. "These issues should have been addressed during the last six months."

The groups added that in many states, public health restrictions have been eased such that employees can return to their offices, while if companies are hesitant to resume normal office operations, plenty of other business have managed to make the switch to mostly remote workforces.

"If there are privacy and data security issues posed by working from home, multimillion-dollar transnational corporations should have been able to figure this out during the last 6 months," the groups wrote. "To the extent there are furnishers that do not have the data security safeguards needed to investigate disputes using employees at home, these same furnishers should not be actually furnishing information to the [credit reporting agencies] either absent those safeguards."

Joining the National Consumer Law Center on the letter were the Consumer Federation of America, National Association of Consumer Advocates, U.S. Public Interest Research Group and more than a dozen other organizations.

Representatives for the CFPB did not immediately return a request for comment late Thursday.

--Editing by Breda Lund.

For a reprint of this article, please contact reprints@law360.com.