CFPB adopts flexible stance regarding certain credit card disclosures during pandemic

The Consumer Financial Protection Bureau (CFPB) is providing temporary, targeted flexibility during the coronavirus (COVID-19) pandemic for credit card issuers regarding the electronic provision of certain disclosures under truth-in-lending laws that are required to be provided in writing, in effect allowing some required consent and affirmation requirements to be satisfied orally by phone call, according to an agency statement issued Wednesday.

“The Bureau understands that during the pandemic, some credit card issuers are receiving far more phone calls from consumers than usual and may be operating with reduced staffing or servicing capability. Consumers may reach out to issuers seeking relief that issuers may not be able to provide without first providing certain written disclosures required by Regulation Z,” the statement reads.

In light of this, the CFPB said, the bureau will take a flexible supervisory and enforcement approach during this pandemic regarding oral telephone interactions where a card issuer may seek to open a new credit card account for a consumer, to provide certain temporary reductions in annual percentage rates (APRs) or fees applicable to an existing account, or to offer a low-rate balance transfer. This will apply only under provisions of Reg Z governing non-home secured, open-end credit, the agency said.

“In these instances, the Bureau does not intend to cite a violation in an examination or bring an enforcement action against an issuer that during a phone call does not obtain a consumer’s E-Sign consent to electronic provision of the written disclosures required by Regulation Z, so long as the issuer during the phone call obtains both the consumer’s oral consent to electronic delivery of the written disclosures and oral affirmation of his or her ability to access and review the electronic written disclosures,” the bureau stated.

The bureau’s statement also says issuers are expected to take reasonable steps during phone calls to verify consumers’ electronic contact information. “For example, if during a phone call a consumer provides an issuer with the consumer’s email address, the Bureau expects that the issuer will confirm the correctness of the consumer’s email address, such as by clearly and understandably reading the email address back to the consumer so that the consumer can verify its correctness,” it stated. “In other instances, an issuer may already have an email address for the consumer on file. In these instances, the Bureau expects that during the phone call the issuer would clearly and understandably state that on-file email address to the consumer so that the consumer can verify its accuracy.”

The CFPB pointed out that Regulation Z (implementing the Truth in Lending Act) generally requires that credit card issuers provide disclosures to consumers in writing. It noted that where written disclosures are required, the consumer consent provisions of the E-Sign Act allow the disclosure to be provided electronically subject to several requirements, among them: the issuer must obtain a consumer’s affirmative consent to the electronic provision; the issuer must provide certain disclosures to the consumer prior to obtaining the consumer’s consent; and the consumer must “consent electronically, or confirm his or her consent electronically, in a manner that reasonably demonstrates that the consumer can access information in the electronic form that will be used to provide the information that is the subject of the consent.”

The latter requirement, combined with another provision that states that oral communications are not electronic records for purposes of the E-Sign Act’s consumer disclosure provisions, precludes card issuers from obtaining a consumer’s consent orally to electronic delivery of written electronic disclosures, the bureau said.

CFPB release

Statement on Supervisory and Enforcement Practices Regarding Electronic Credit Card Disclosures in Light of the COVID-19 Pandemic (June 3, 2020)