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Law360 (April 13, 2020, 7:31 PM EDT ) Attorneys general from California, New York and a slew of other states called on the Treasury Department to ensure debt collectors can't get their hands on the stimulus checks the federal government is giving out to help U.S. residents weather the coronavirus pandemic.
The payouts of up to $1,200 per adult and $500 per child promised under the Coronavirus Aid, Relief and Economic Security, or CARES, Act have already started appearing in people's bank accounts, but the states said Monday there's no legislative guardrail keeping creditors from tapping into them.
Only the Treasury can fix this oversight, the attorneys general said, pointing to a provision in the $2.2 trillion relief package that allows the department to roll out regulations as needed to help guide the distribution.
"The states request that Treasury immediately take any and all actions to designate CARES Act payments as exempt from garnishment, including by issuing a regulation or guidance designating CARES Act payments as 'benefit payments' exempt from garnishment," the coalition said.
A similar roster of attorneys general also fired off a letter to the Consumer Financial Protection Bureau on Monday, criticizing the bureau's plan to roll back protections for consumers amid the crisis.
On April 1, the CFPB announced it would not be punishing banks, debt collectors, payday lenders, consumer reporting companies and other corporations that violate consumers' rights under the Fair Credit Reporting Act during the pandemic.
The law mandates credit reporting agencies include accurate information in consumers' credit files, and the attorneys general said Monday that now is not the time to let these agencies "fall asleep at the switch."
"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," they said.
Democratic lawmakers have also panned the plan, calling the agency's response to the crisis "tepid and ineffectual" in a letter earlier in April.
Representatives for the Treasury and the CFPB did not immediately respond to requests for comment Monday afternoon.
--Additional reporting by Lauren Berg. Editing by Amy Rowe.
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