In a surprising move, on Wednesday, March 31, 2021, the CFPB announced it is rescinding seven policy statements issued last year during the early days of the COVID-19 pandemic. This is further evidence that the CFPB under acting director Dave Uejio is reaffirming its priority as an active enforcer of federal consumer protection statutes.
As some may remember, between March and June 2020, the CFPB and other prudential regulators issued several statements in effort to help financial institutions figure out how to help customers navigate the COVID-19 pandemic while complying with federal consumer protection statutes and the CARES Act. In several of the statements issued by the CFPB, it included language similar to the following:
The Bureau encourages prudent efforts undertaken in good faith that are designed to meet the exigent needs of financial institutions’ borrowers and other customers. To that end, when conducting examinations and other supervisory activities and in determining whether to take enforcement action, the Bureau will consider the circumstances that entities may face as a result of the COVID-19 pandemic and will be sensitive to good-faith efforts demonstrably designed to assist consumers.
Financial institutions have been relying on this promise of flexibility around examinations, particularly regarding COVID-19 accommodations, for the past year. The following seven CFPB statements have been rescinded effective April 1, 2021:
- Statement on Supervisory and Enforcement Practices Regarding Quarterly Reporting Under the Home Mortgage Disclosure Act (March 26, 2020)
- Statement on Supervisory and Enforcement Practices Regarding Bureau Information Collections for Credit Card and Prepaid Account Issuers (March 26, 2020)
- Statement on Bureau Supervisory and Enforcement Response to COVID-19 Pandemic (March 26, 2020)
- Statement on Supervisory and Enforcement Practices Regarding the Fair Credit Reporting Act and Regulation V in Light of the CARES Act (April 1, 2020)***
- Statement on Supervisory and Enforcement Practices Regarding Certain Filing Requirements Under the Interstate Land Sales Full Disclosure Act and Regulation J (April 27, 2020)
- Statement on Supervisory and Enforcement Practices Regarding Regulation Z Billing Error Resolution Timeframes in Light of the COVID-19 Pandemic (May 13, 2020)
- Statement on Supervisory and Enforcement Practices Regarding Electronic Credit Card Disclosures in Light of the COVID-19 Pandemic (June 3, 2020)
*** Notably, the CFPB is only partially rescinding last year’s guidance for complying with the FCRA and Regulation V during the pandemic. It is leaving the section of that statement entitled “Furnishing Consumer Information Impacted by COVID-19” intact. In other words, the CFPB still intends to demonstrate some flexibility during examinations and enforcement actions to financial institutions who extended voluntary payment relief to consumers and accurately reported that to the consumer reporting agencies. In line with other statements from the CFPB this year, however, the rescission stresses the importance of credit reporting and its impact on communities of color:
The Bureau continues to encourage institutions to meet the financial services needs of their customers affected by the COVID-19 pandemic. The COVID-19 pandemic is a national emergency that threatens the financial well-being of millions of Americans, with particularly dire effects to communities of color. . . . The Bureau’s statutory purposes include “ensuring . . . that markets for consumer financial products and services are fair, transparent, and competitive.” 12 U.S.C. 5511(a). The information from consumer reports is used to make many kinds of important decisions, including whether a consumer can borrow money or how much he or she will pay in interest to finance a home, a car, or a higher education. Consumer reporting information is also commonly used for other purposes too, beyond credit, such as to determine if consumers can rent housing or obtain insurance and, if so, at what price. In short, accurate consumer reporting has a profound influence on the lives of consumers and whether they will be able to take advantage of certain opportunities. Declining to cite conduct that is a violation of FCRA, and Regulation V based on the articulated principles in the Statement may skew the consumer financial marketplace, to the detriment of market participants who do not act in violation. To fulfill its statutory mandate, the Bureau has made it a priority to direct its supervisory, enforcement, and other tools to the prevention of harm to consumers from unlawful acts and practices.
And, as of April 1, 2021, the CFPB has formally withdrawn as a signatory to two Interagency Statements issued last year and announced that it “does not intend to continue to provide the flexibilities afforded entities” in the following:
- Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (April 7, 2020)
- Interagency Statement on Appraisals and Evaluations for Real Estate Related Financial Transactions Affected by the Coronavirus (April 14, 2020)
The notices of rescission can be accessed here.
Over the past several months, the Adams and Reese Crisis Response and Preparedness Team has sent out various alerts regarding the outbreak of COVID-19 and how it may affect the way in which you do business. We have compiled a list on our Crisis Response and Preparedness page.