FCRA Updates in Light of COVID-19 and Current Litigation Trends

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COVID-19 has changed many ways of doing things, including our jobs as debt collectors. By now most of us are aware of the changes the pandemic has affected our daily operations, for instance, possible operational changes related to the CARES (Coronavirus Aid, Relief, and Economic Security) Act. However, largely for posterity’s sake, in this edition of my legal and legislative takes on news affecting our industry, I wanted to provide a timely update and document the changes on record with regard to the Fair Credit Reporting Act and how it relates to our nation’s COVID-19 legislation.

Questions Abound

While many regulations, reporting requirements, and allowances, especially at the state level, have been unclear, the CARES Act is at least theoretically clear. However, the very definition of who is allowed accommodation brings up questions about, essentially, whether, by default, all consumers are defined as impacted by COVID-19. The definition of “affected by COVID-19 is not specifically addressed and thus how they are accommodated is not specified in the CARES Act. In fact, as we’ve seen as this national state of emergency continue, various lenders have reacted differently to their financial obligations under the CARES Act. And yet, one clear point from the CARES Act is that any charged-off account is not subject to accommodation. While not explicitly considered, our industry thus has some “wiggle-room” to interpret their reactions to their operations under the CARES Act. I have discussed ways to avoid potential litigation ex post facto in two previous blogs, and as ever, keeping up-to-date with all relevant regulations while maintaining your business’s bottom line and subsequently acknowledging that we are all in the midst of a declared national health emergency are the three key points to consider when determining how your operations are and will be affected by subsequent interpretations of various legislative changes surrounding COVID-19.

Consumer Data Industry Association (CDIA)

CDIA guidelines suggest that we report accounts as AW (affected by natural or declared disaster) regardless of what is explicitly covered by the CARES Act or demanded by a consumer. We do not have to cease collections but by preemptively covering your operations from consumer counterclaims or future class action suits during this unprecedented time by marking reports to the Consumer Financial Protection Bureau as AW, we can promote a best practice towards consumers and protect ourselves given the ambiguity in the current regulations. Especially given the various pandemic related changes to state regulations, this huge ambiguity, and potential for actions ex post facto, adding the AW code to consumer files will help provide a buffer in case the federal CARES Act ends and yet a state still has their state of emergency declared, for instance.

Best Practices

It’s hard to navigate these uncharted waters for best practices from all sides, especially when there aren’t explicit regulations in place, which unfortunately can place compliance in a form of limbo. Since Tag Process focuses on compliance as our chief operating principle, ambiguity can create wrinkles in our operations when there is gray area regarding laws and regulations. However, adopting a consumer-centric policy during these unprecedented times is a way to ensure that we’re implementing best practices within this gray area. At Tag Process we’re taking the straight and narrow path to make the right decisions for our customers during this national disaster, even when it’s not required explicitly by law. We look forward to working with our consumers to assist with fair and equitable debt collection practices throughout life’s ups and downs no matter what they are.

Disclaimer 

This information is not legal advice and may not be used as legal advice. Information discussed or contained is not an explanation of the law and is presented for educational purposes only.

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