A&B ABstract: Without additional guidance, the recent statement from the Consumer Financial Protection Bureau (CFPB) about stimulus funds may create consumer confusion.
On March 17, 2021, Acting CFPB Director Dave Uejio issued a statement regarding consumers’ access to Economic Impact Payment (EIP) funds distributed through the American Rescue Plan. The Acting Director expressed the CFPB’s concern that “some of the [EIP] funds will not reach consumers, and will instead be intercepted by financial institutions or debt collectors to cover overdraft fees, past-due debts, or other liabilities.”
The Acting Director indicated he had been in dialogue with financial industry trade associations in recent days, and that many of these organizations told the Bureau that they have begun or soon will take proactive measures to help ensure that consumers can access the full value of their stimulus payments. According to the CFPB, “[i]f payments are seized, many financial institutions have pledged to promptly restore the funds to the people who should receive them.” The Acting Director said the CFPB appreciates these efforts and will stay closely engaged on the issue.
In the absence of additional guidance from the CFPB, this statement may inadvertently result in consumer confusion. For one thing, it does not distinguish between depository institutions and third-party debt collectors, which operate according to differing regulatory requirements that may affect how the institutions can work with customers to address concerns about EIP funds. For another thing, the statement does not distinguish between the kinds of issues that depository institutions may be able to work with customers to address (like overdrafts and set-off rights) and the kinds of issues that banks may be legally unable to address (like court garnishment orders).
As the CFPB stays engaged on the issue, additional guidance may be needed to prevent consumer confusion. The provision of additional clarity will no doubt be welcomed by consumers and financial institutions alike.