A recent letter and article was posted in Medium by former CFPB Director Cordray responding to the recent COVID-19 guidance. He argued, incorrectly, that credit bureaus will not be held accountable to deadlines outlined in the FCRA pertaining to dispute deadlines. He opines that there are areas where the CFPB needs to fill in the gaps in their response to the COVID-19 pandemic.
Consumers’ first call concerning their finances should be to their lenders to see what is available in this difficult time, and the CFPB has outlined that well in their recent guidance as well as on their Corona Virus Pandemic landing page. They state that “The Bureau specifically states that it does not intend to cite in an examination or bring an enforcement action against firms who exceed the deadlines to investigate such disputes as long as they make good faith efforts during the pandemic to do so as quickly as possible.” This comment is welcomed news as the number of disputes in these times is high. It also recognizes that credit repair companies maybe be inundating the system with multiple dispute filings per day.
On the heels of former Director Cordray’s piece in Medium, Democratic Senators on the Banking Committee also sent a letter to Director Kraninger outlining their recommendations. We see their letter as fair and in-line with the CARES Act provisions as they support the current status on credit files and the use of disaster codes for furnishers. This is the best possible outcome we have for consumers and we will continue to advocate this path as we discuss the next emergency relief bill the House of Representatives put forward, which rolls back and adds more convoluted provisions.
House of Representative’s Credit Reporting Priorities:
- Suspension of Negative Credit Reporting. This provision would suspend negative consumer credit reporting during the COVID-19 pandemic and other declared major disasters plus 120 days. Consumers with continued hardship after the 120-day post-pandemic or major disaster period could apply for additional time. Credit score furnishers are also prohibited from creating and/or implementing new credit scoring models that would lower existing consumer credit scores during the COVID-19 pandemic or during other major disaster periods. This provision would also permanently prohibit reporting consumer medical debt arising from the cost of treatment for COVID-19 or medical expenses arising out of other declared major disasters.
- Preservation of State Consumer Protections over Credit Reporting. This provision would eliminate a provision of the CARES Act that preempts state consumer protections related to credit reporting.