CFPB Offers Flexibility for Responding to Credit Reporting Disputes During COVID-19 Pandemic — But Private Litigants May Not

Bradley Arant Boult Cummings LLP

The CFPB’s April 1, 2020, statement regarding credit reporting for loans affected by COVID-19 announced a “flexible supervisory and enforcement approach during this pandemic.” In addition to guidance regarding furnishing obligations while consumers are impacted by COVID-19, the bureau specifically announced relaxed enforcement standards for companies struggling to respond to consumer credit disputes within the statutory timelines due to the challenging conditions created by the COVID-19 pandemic.

This is certainly good news for furnishers of information, but there is a fly in the ointment: The CARES Act’s amendment to the FCRA itself does not extend any deadlines for responding to a consumer’s credit reporting dispute. While the CFPB might be relaxing standards, consumers – and the plaintiff’s bar – might not extend the same grace when asserting FCRA claims in private lawsuits.

As the CFPB notes, the FCRA generally requires furnishers of credit information to investigate and respond to a consumer’s dispute within 30 days of receipt of the dispute. Noting the “operational disruptions that pose challenges . . . in investigating consumer disputes,” the bureau announced that it “will consider a consumer reporting agency’s or furnisher’s individual circumstances and does not intend to cite in an examination or bring an enforcement action against a consumer reporting agency or furnisher making good faith efforts to investigate disputes as quickly as possible, even if dispute investigations take longer than the statutory timeframe.” The bureau also announced that it would “consider the significant current constraints on . . . time, information, and other resources” when assessing a furnisher’s decision to determine that a dispute is frivolous or irrelevant, thereby eliminating the need to respond.

The CARES Act, however, does not amend or supplant the FCRA’s 30-day deadline for responding to consumer disputes, and the FCRA provides consumers with a private right of action against furnishers who fail to timely comply with these provisions. Accordingly – the CFPB’s relaxed approach not withstanding – a furnisher’s failure to timely respond to a consumer’s credit dispute can still lead to liability in a private FCRA action brought by a consumer who was harmed by the furnisher’s failure to timely investigate and respond.

The benefits of practical and flexible enforcement should not be understated. Companies must be cognizant, however, that the benefits of relaxed regulatory supervision do not extend to private FCRA lawsuits brought by consumers. Companies that relax their procedures or timelines for responding to credit disputes do so at the risk of future litigation with consumers.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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Bradley Arant Boult Cummings LLP

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