The CFPB recently issued a statement and two sets of FAQs clarifying certain responsibilities that depositories, financial institutions, credit card issuers, and other open-end, non-home secured creditors owe to consumers during the COVID-19 crisis, including timelines for billing error resolution.
In its statement on billing error resolution timeframes, the CFPB acknowledged that the crisis has made it difficult to keep up with regular requirements regarding creditors’ responses to consumers’ notices of billing errors. The CFPB stated that it will consider a creditor’s circumstances when evaluating a creditor’s compliance Regulation Z rules regarding the maximum timeframes for billing error resolution. It confirmed that as long as a creditor has followed all other requirements and has made good faith efforts to obtain the necessary information from retailers to resolve a purported billing error as quickly as possible, the CFPB 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.
The first set of FAQs clarifies rules in Regulations E and DD as they relate to deposits and payments made during the pandemic. The FAQs explain that entities defined as Financial Institutions (FIs) and Depository Institutions (DIs) can make changes to consumers’ account terms due to the pandemic. FIs and DIs must provide consumers with appropriate notice of any disfavorable changes made, but any changes which are favorable to the consumer can be implemented immediately without advance notice. Further, the FAQs explain that FIs and DIs may choose to provide consumers with immediate relief from difficulties by waiving fees and proactively engaging with customers on a case-by-case basis. The CFPB also reminded FIs of their obligation to “honor stop payment requests” related to consumer-set recurring bills or expenses, such as monthly memberships.
The second set of FAQs provides further clarity regarding existing regulatory flexibilities for open-end creditors, such as credit card issuers. The FAQs confirm that a creditor may change account terms, but explains that significant term changes require advance notice. If a creditor changes terms for the purpose of assisting consumers who need assistance due to hardship —for instance, if the creditor chooses to extend a credit card account’s grace period—advance notice is not required. Additionally, the FAQs explain that as long as the creditor complies with certain requirements, a creditor does not need to provide advance written notice of any increase in charges or payments that will follow completion of, or failure to complete, a hardship relief arrangement. Finally, the FAQs confirm that open end non-home secured creditors may proactively provide information and resources to consumers. The FAQs provide further details regarding the above-mentioned requirements.