Consumer groups urge CFPB to enforce credit-reporting dispute deadlines

September 25, 2020.

More than 20 consumer advocacy groups pushed U.S. regulators to revoke a six-month-old COVID-19 relief measure giving credit reporting agencies and lenders that provide them information more time to investigate disputes, citing a 550% increase in complaints to the government.

The regulatory relief, in which the Financial Protection Bureau said it wouldn’t hold credit reporting agencies and the banks and debt collectors that report to them to Fair Credit Reporting Act deadlines for looking into disputes because of the pandemic’s effect on operations, is overdue for revocation, the organizations said in a Thursday letter to Director Kathleen Kraninger.

“Allowing CRAs and furnishers to violate the statutorily imposed deadlines imposed by the FCRA is having a significant impact on American consumers,” said the signatories, led by the National Consumer Law Center. “There should no longer be a pressing need for relaxing statutorily mandated deadlines due to ‘reductions in staff, difficulty intaking disputes, or lack of access to necessary information.’”

The groups were citing the bureau’s justification for the relief, delivered April 1 as confirmed COVID-19 cases continued their initial upward hike in the U.S. and local governments initiated lockdowns.

The Fair Credit Reporting Act “generally requires” that consumer disputes be investigated within 30 days of their receipt, or up to 45 days when the complainant provides additional relevant information during the initial investigation period, the regulator noted in its guidance.

“The bureau is aware that some consumer reporting agencies and furnishers may face significant operational disruptions that pose challenges for them in investigating consumer disputes,” it said.

“In evaluating compliance with the FCRA as a result of the pandemic, the bureau 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 CFPB said.

But most states have either partially or totally lifted pandemic-related shutdown orders, noted the organizations, which include the Consumer Federation of America, National Association of Consumer Advocates, U.S. Public Interest Research Group and Americans for Financial Reform Education Fund.

“Even if the CRAs and furnishers understandably want to minimize the number of employees in a location, thousands of large and small companies have shifted in the last six months to operating with most of their workforce working from home,” the advocacy groups said. “If there are privacy and data security issues posed by working from home, multimillion-dollar transnational corporations should have been able to figure this out during the last six months.”

Examining consumer complaints lodged to the bureau between April 1 and Sept. 23, the organizations found more than 13,000 saying their disputes were either not addressed within the statutory deadline or left entirely unaddressed. Compared to the 2,000 complaints sent during the same period in 2019, that marks a 550% increase, the groups said — “likely as a result of the CFPB guidance.”

The more recent complaints included 6,864 in the credit reporting subcategory of “Was not notified of investigation status or results,” and another 6,262 in the subcategory “Investigation took longer than 30 days.”

In an Aug. 24 complaint, one consumer said a lack of dispute resolution was preventing him from moving forward on a house purchase.

“It has been over 60 days ago since I’ve sent letters to this bureau,” the complaint said. “I’m stressed and have been sending letters before this and still no response.”

The CFPB did not immediately respond to a request for comment.