Flexibilities for credit issuers, consumers amid COVID-19 disruptions outlined in CFPB statement, FAQs

Creditors that take longer than required by Regulation Z to resolve an open-end credit account billing error notice will not be cited for a violation in an examination or face an enforcement action if it has made “requisite good-faith efforts” to get the information it needs to resolve the error, the consumer financial protection said in a statement addressing challenges posed by the COVID-19 (coronavirus) pandemic.

The Consumer Financial Protection Bureau (CFPB) on Wednesday issued a statement and two FAQ documents addressing such situations involving credit card issuers and other open-end, non-home-secured creditors. It noted the challenges posed if a creditor, due to disruptions arising from the coronavirus crisis, cannot get needed information from a merchant . It also noted risks of doing harm to merchants as well as consumers if decisions are based on incorrect information.

The CFPB, in its statement, recounts that section 1026.13 of Regulation Z – Reg Z being the CFPB’s implementing regulation for the Truth in Lending Act (TILA) – requires a creditor to mail or deliver written acknowledgment to a consumer within 30 days of receiving a billing error notice from the consumer (unless the creditor has already complied with appropriate resolution procedures, as applicable, within that period). The creditor is also required to comply with appropriate billing error resolution procedures (also laid out in the rule), as applicable, within a maximum timeframe of two complete billing cycles “but in no event later than 90 days after receiving the billing error notice,” it said.

Some requirements still stand, however, and the bureau said it “does not expect, however, that current circumstances would prevent any creditor,” until such issues are resolved, from fully complying with the following requirements of the rule:

  • The consumer need not pay (and the creditor may not try to collect) any portion of any required payment that the consumer believes is related to the disputed amount (including related finance or other charges).
  • The creditor or its agent shall not (directly or indirectly) make or threaten to make an adverse report to any person about the consumer’s credit standing, or report that an amount or account is delinquent, because the consumer failed to pay the disputed amount or related finance or other charges.
  • A creditor shall not accelerate any part of the consumer’s indebtedness or restrict or close a consumer’s account solely because the consumer has exercised in good faith their rights provided by section 1026.13.

The statement considers the challenges consumers are also facing in making timely payments.

“Like creditors and merchants, some consumers may also face significant disruptions as a result of the COVID-19 pandemic, which may include challenges to health, travel, and income, or delay in receiving periodic statements. Further, many consumers may discover that merchant or creditor locations are closed, and that hold times for telephone calls to merchants or creditors are extensive because of increased call volumes,” the bureau wrote. “In light of these considerations, the Bureau encourages creditors to show flexibility when deciding whether to apply the 60-day timeline the regulation affords consumers to provide a billing error notice after it appears on the first periodic statement.”

The CFPB said many creditors have already assisted consumers through measures such as late-fee waivers or refunds and repayment forbearance or deferral, in some cases without interest accrual or with temporary interest rate reductions.

“The Bureau encourages creditors to consider whether they also want to provide consumers with these types of relief options during this time, especially as many consumers are facing temporary income loss,” it stated. “Creditors can also help consumers take advantage of online and mobile self-service tools, which can be faster and more convenient for both the creditor and the consumer than a telephone call with a customer service representative.”

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