Consumer Finance Litigation

On April 13, 2020, twenty-three Attorneys General sent a joint letter urging the CFPB to withdraw its recent guidance on Fair Credit Reporting Act (FCRA) requirements during the COVID-19 crisis.  The request came from Attorneys General of Pennsylvania, California, Colorado, the District of Columbia, Hawaii, Illinois, Iowa, Maine, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Puerto Rico, Rhode Island, Vermont, Virginia, Washington, and Wisconsin.

In the letter, the Attorneys General responded to the CFPB’s April 1, 2020 Statement on Supervisory and Enforcement Practices Regarding the FCRA, in which the CFPB indicated it would not enforce the CARES Act’s amendment to the FCRA that requires lenders to report as current any loans that are subject to forbearance or accommodation due to COVID-19.  The Attorneys General also urged the CFPB to reverse its decision to refrain from taking enforcement or supervisory actions against consumer reporting agencies (CRA) for failing to investigate consumer disputes within 30 days.  By declining to enforce the CARES Act’s amendments to the FCRA, the Attorneys General argued that the CFPB was depriving consumers of necessary protections that enable them to weather economic turbulence without incurring lasting harm to their credit scores.  The Attorneys General acknowledged that mistakes would likely be made in credit reporting as furnishers and CRAs adapt to the new requirements, but suggested that this makes enforcement by the CFPB and state Attorneys General even more important.

While it remains to be seen whether the CFPB will change its position in response to this letter, the state Attorneys General made it clear that they will vigorously enforce the FCRA’s deadlines against companies that fail to comply with the FCRA’s requirements.  Therefore, CRAs and furnishers of information should ensure that they continue to comply with the FCRA and the CARES Act’s amendments to the FCRA.