CFPB Won't Drop Credit Reporting Dispute Deadline Relief

By Jon Hill
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Law360 (November 12, 2020, 6:49 PM EST ) The Consumer Financial Protection Bureau is standing by regulatory relief it granted to the credit reporting industry at the outset of the coronavirus pandemic, declining consumer advocates' calls to stop giving industry members leeway on legally mandated deadlines for conducting error dispute investigations.

In a letter dated Nov. 9, CFPB Director Kathleen Kraninger told the National Consumer Law Center that the agency's April move to temporarily relax those Fair Credit Reporting Act deadlines for COVID-19-related reasons doesn't mean that companies are being let completely off the hook.

"I want to make clear that all companies continue to remain responsible for FCRA compliance with dispute resolutions in a timely fashion," Kraninger wrote. "However, during the extraordinary times in which we find ourselves, the bureau does not intend to cite in an examination or bring an enforcement action against firms who exceed the deadlines to investigate such disputes — but only as long as efforts are made in good faith to do so as quickly as possible."

The Fair Credit Reporting Act generally requires credit reporting agencies and data furnishers to investigate within 30 days when consumers dispute information on their credit reports, though this timetable can be extended by another 15 days in some circumstances.

But the CFPB announced in April that it would not take supervisory or enforcement action against companies that try but fail to meet these deadlines, attributing the policy to the potentially "significant operational disruptions" then facing the industry due to the pandemic.

More recently, however, the National Consumer Law Center and other consumer groups have questioned the continued need for this policy. They urged Kraninger in September to revoke it, pointing to a dramatic surge since April in the number of consumer complaints received by the CFPB about dispute investigation delays.

Those delays "are causing real and significant difficulties to American consumers," the groups argued, adding that they are hard to justify when companies have now had ample time to adjust their operations to compensate for any pandemic-related difficulties.

But Kraninger indicated in her Nov. 9 letter that the CFPB isn't ready to make any such blanket determinations. Instead, the agency will keep looking at the handling of disputes on a company-by-company basis, according to the letter.

Kraninger said the dispute-handling issue is also an area the CFPB has asked companies about as part of its credit reporting-related "prioritized assessments," a type of targeted exam the agency rolled out earlier this year as part of its pandemic response.

The letter, which drew heavily from the CFPB's previously published descriptions of its prioritized assessment program, noted that the credit reporting-related assessments have additionally asked about compliance with Coronavirus Aid, Relief and Economic Security Act provisions that require creditors to report borrowers as current if they receive a payment accommodation because of the pandemic.

"I want to emphasize again that, in the prioritized assessment and future supervisory and enforcement work, the bureau has been and will evaluate individually the efforts and circumstances of each furnisher and [credit reporting agency] in determining if it made good faith efforts to investigate disputes as quickly as possible," Kraninger wrote.

Representatives for the CFPB did not immediately respond to questions about the letter, but National Consumer Law Center staff attorney Chi Chi Wu expressed disappointment with the agency's position in an interview Thursday, saying that consumers are harmed when credit reporting dispute investigations fall by the wayside.

"Certainly we were hoping for a stronger response," Wu told Law360. "But while the CFPB maybe still isn't going to cite or take action against the credit bureaus and furnishers for this, it is not the only game in town."

Wu noted that attorneys general from New York, the District of Columbia and 20 other states have already said they will be monitoring credit reporting companies' actions closely during the pandemic. In a letter to the three major credit bureaus in April, the attorneys general pledged to "enforce all federal and state requirements during this crisis," regardless of what the CFPB does.

There's also private enforcement, Wu said, adding that the CFPB's deadline relief will only get companies so far.

"In some of these cases where people can't get any response at all to their disputes, at a certain point, it is going to look like it was not in good faith," Wu said.

--Editing by Daniel King.

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

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