Groups Demand End To CFPB's Dispute Deadline Relief, Again

By Al Barbarino
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Law360 (March 26, 2021, 6:35 PM EDT) -- Consumer advocates are continuing their efforts to stamp out a Consumer Financial Protection Bureau COVID-19 relief measure from April 2020 that gives companies leeway on dispute investigation deadlines, claiming that it is no longer necessary and has "likely" led to an eightfold year-over-year increase in related consumer complaints.

In a letter sent Thursday to CFPB acting Director David Uejio, the 16 groups said there is "no reason" to allow the April 1, 2020, relief to continue one year into the COVID-19 pandemic, suggesting that consumer credit reporting agencies and related firms supervised by the CFPB have had more than enough time to adjust to the pandemic. 

"Enough is enough — the extra time provided by the guidance needs to be revoked," according to the letter, sent by a consortium headed up by the National Consumer Law Center that also includes the Consumer Federation of America, Consumer Reports and the National Association of Consumer Advocates. "One year later, there is no reason to allow violation of statutorily mandated deadlines."

Under the Fair Credit Reporting Act, firms must typically investigate disputes within 30 days — with potential 15-day extensions — but the April 2020 measure said the CFPB would not take supervisory or enforcement actions if the deadlines weren't met due to pandemic-related "operational disruptions."

At the time, the agency cited "reductions in staff, difficulty intaking disputes, or lack of access to necessary information" among the disruptions. But the consumer groups said Thursday, "One year later, there is no reason to allow violation of statutorily mandated deadlines" based on these issues. 

The request follows a September letter sent by a broader group of 20 organizations that urged then-CFPB Director Kathy Kraninger to revoke the measure, pointing to an initial "dramatic" uptick in consumer complaints about dispute investigation delays that the groups claimed were harming consumers.

"The situation has only gotten worse," the groups argued Thursday, claiming that nearly 40,000 complaints about "nonexistent or delayed responses to disputes" have been logged since the April 1, 2020, guidance was issued.

That's a nearly 800% increase from the 4,500 such complaints from the previous roughly one-year prior period between April 1, 2019, and March 13, 2020, according to the letter, which said the surge was the "likely" result of the April guidance.

In its annual report to Congress, the CFPB on Wednesday highlighted an agency-wide nearly 54% uptick in 2020 complaints versus the previous year.

Neither the agency nor Chi Chi Wu, a staff attorney with the National Consumer Law Center who is representing the groups, responded to requests for comment on Friday.

Kraninger sent a response letter to the groups in November declining to pull the plug on the relief. Kraninger, who resigned from the agency in January, noted in the letter that companies "continued to remain responsible" for dispute resolutions and that the relief only applied to companies making "good faith" efforts to complete their investigations "as quickly as possible."

Uejio is filling in as acting director until President Joe Biden's nominee to head up the agency, current Federal Trade Commission Commissioner Rohit Chopra, takes up the post.

--Additional reporting by Jon Hill. Editing by Steven Edelstone.

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