CARES Act: Significant Changes to FCRA Credit Reporting Obligations

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law in response to the COVID-19 pandemic. The CARES Act includes significant changes for credit reporting agencies or any institutions that furnish information to credit reporting agencies regarding accounts receiving relief due to the COVID-19 crisis. Specifically, the CARES Act amended the Fair Credit Reporting Act (“FCRA”) to require that any institution making an “accommodation” to a consumer regarding payments on a credit obligation due to the COVID-19 crisis, under which the consumer is not required to make one or more payments, must report the affected account as “current” or as the status that was reported prior to the accommodation.

The CARES Act defines an “accommodation” as “an agreement to defer one or more payments, make partial payments, forbear any delinquent amounts, modify a loan or contract, or any other assistance or relief granted to a consumer who is affected by the coronavirus disease 2019 (COVID-19) pandemic during the covered period.” The “covered period” means the period beginning on January 1, 2020 and ending on the later of (1) 120 days after the enactment of the CARES Act or (ii) 120 days after the termination of the national emergency declared on March 13, 2020.

Under this amendment, if an account was current prior to the accommodation, the furnisher must continue to report the account as current. Likewise, if the account was delinquent prior to the time the accommodation was made, the furnisher may continue to report the account as delinquent until the consumer brings the account current again. It is also important to note that, due to the CARES Act’s broad definition of the term “accommodation,” any type of modification to a consumer’s obligations made pursuant to an agreement between the consumer and the furnisher may qualify as an “accommodation.”

Given the FCRA’s existing requirement that furnishers respond to consumer disputes within 30 days, there is a possibility that this enhanced reporting requirement for accounts modified as a result of the current crisis may lead to increased consumer disputes regarding credit reporting, and, potentially, litigation. While institutions are encouraged to offer payment relief and flexibility to consumers in these unprecedented times, these changes will require enhanced attention and diligence on the part of information furnishers to accurately document, monitor, and report changes to consumers’ payment obligations arising out of the coronavirus pandemic. MH attorneys have experience advising businesses regarding compliance with federal and state regulations governing consumer credit reporting, including the FCRA, as well as litigating individual and class action claims arising under the FCRA and similar statutory schemes. For more information, feel free to contact Jodi Swick or Allison Fernandez.