Banking and Finance Law Daily CFPB outlines responsibilities of financial firms during COVID-19 pandemic
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Thursday, May 14, 2020

CFPB outlines responsibilities of financial firms during COVID-19 pandemic

By Nicole D. Prysby, J.D.

The Bureau issued a statement regarding billing-error responsibilities of credit card issuers, as well as FAQs about account changes during the COVID-19 pandemic.

On May 13, 2020, the Consumer Financial Protection Bureau issued a statement that outlines billing-error responsibilities of credit card issuers and other open-end non-home secured creditors during the COVID-19 pandemic. The Bureau also announced the release of related FAQs. The billing error statement explains that the Bureau will grant flexibility during the pandemic when evaluating a creditor’s compliance with the maximum timeframe for billing error resolution set forth in Regulation Z (Truth in Lending). The Bureau does not intend to cite a violation in an examination or bring an enforcement action against a creditor that takes longer than required by the regulation to resolve a billing error notice, so long as the creditor has made good-faith efforts to resolve the error. The FAQs released by the Bureau explain that financial and depository institutions and credit card issuers may change account terms for consumers during the pandemic without notice to the consumer, if the change is favorable for the consumer.

Bureau statement. The billing error statement, "Statement on Supervisory and Enforcement Practices regarding Regulation Z Billing Error Resolution Timeframes in Light of the COVID-19 Pandemic," acknowledges that some businesses, especially small merchants, may face significant operational disruptions due to the pandemic, making it more difficult for them to respond to creditors’ inquiries. This translates into a delay for creditors to accurately and timely resolve consumers’ billing error notices. Recognizing these difficulties, the Bureau will grant flexibility during the pandemic.

More specifically, in evaluating a creditor’s compliance with the maximum timeframe for billing error resolution set forth in Regulation Z, the Bureau intends to consider the creditor’s circumstances and does not intend to cite a violation in an examination or bring an enforcement action against a creditor that takes longer than required by the regulation to resolve a billing error notice, so long as the creditor has made good-faith efforts to obtain the necessary information and make a determination as quickly as possible, and complies with all other requirements pending resolution of the error. However, the flexibility does not extend to certain required actions creditors must take, including that the consumer need not pay any portion of any required payment related to the disputed amount; the creditor shall not threaten to make an adverse report about the consumer’s credit standing because the consumer failed to pay the disputed amount or related finance or other charges; and 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 dispute resolution rights in good faith.

In addition, given the potential lengthy hold times for calls to merchants and creditors, the Bureau encouraged 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.

Bureau FAQs. The FAQs document, "Payments and Deposits Rules FAQs related to the COVID-19 Pandemic," covers changing account terms and other possible relief that may be implemented by financial firms. For example, financial and depository institutions may change account terms for consumers during the pandemic without notice to the consumer, if the change is favorable for the consumer. For example, elimination of monthly account fees or ATM fees. Another FAQs document, "Open-End (not Home-Secured) Rules FAQs related to the COVID-19 Pandemic," provides similar guidance to issuers of open-end credit, such as credit card issuers. For example, there is no 45-day advance notice requirement if a creditor choses to extend an account’s grace period or reduce finance charges.

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