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COVID-19 and credit reporting

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), enacted on March 27, 2020, contains an important amendment to the Fair Credit Reporting Act (“FCRA”) that immediately (and possibly retroactively) affects credit reporting requirements for furnishers of credit information (creditors) to consumer reporting agencies (credit bureaus). It imposes a temporary credit reporting requirement.

Section 4021 of the CARES Act modifies 15 U.S.C. § 1681s-2(a)(1) of the FCRA by adding subsection (F):

(F) Reporting information during COVID-19 pandemic.

  • (i) Definitions. In this subsection:

    • (I) Accommodation. The term “accommodation” includes an agreement to defer 1 or more payments, make a partial payment, 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.

    • (II) Covered period. The term “covered period” means the period beginning on January 31, 2020 and ending on the later of—

    • (aa) 120 days after the date of enactment of this subparagraph [enacted March 27, 2020]; or

    • (bb) 120 days after the date on which the national emergency concerning the novel coronavirus disease (COVID-19) outbreak declared by the President on March 13, 2020 under the National Emergencies Act (50 U.S.C. 1601 et seq.) terminates.

  • (ii) Reporting. Except as provided in clause (iii), if a furnisher makes an accommodation with respect to 1 or more payments on a credit obligation or account of a consumer, and the consumer makes the payments or is not required to make 1 or more payments pursuant to the accommodation, the furnisher shall—

    • (I) report the credit obligation or account as current; or

    • (II) if the credit obligation or account was delinquent before the accommodation—

    • (aa) maintain the delinquent status during the period in which the accommodation is in effect; and

    • (bb) if the consumer brings the credit obligation or account current during the period described in item (aa), report the credit obligation or account as current.

  • (iii) Exception. Clause (ii) shall not apply with respect to a credit obligation or account of a consumer that has been charged-off.

In light of this amendment, furnishers cannot report any specific type of “accommodation” reached with a consumer. Consumers whose accounts were current, who have been given an accommodation and have complied with it, should continue to have their accounts reported as current.

The CARES Act defines “accommodation” as “an agreement to defer 1 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.”

The language "consumer who is affected " does not appear to require that the consumer actually get the disease. Someone whose income is reduced as a result of closure orders or the like would appear to qualify.

Consumers who unilaterally stopped making their payments in full without an agreement would not appear to be covered. However, there may be a sufficient "agreement" if a consumer responds to a lender announcement. Furthermore, the consumer may have a legal right to suspend payment without a creditor's agreement, for example, if the service contracted for cannot be provided as a result of the pandemic (e.g., health club memberships). Any accommodation qualifies. It need not be one required under other CARES Act provisions. An accommodation should include one required by state legislation or a state emergency order.

The amendment does not provide a right of action by consumers. However, since it appears to affect what accurate reporting of the consumer's account consists of, it should be enforceable under the FCRA provisions allowing consumers to dispute inaccurate reporting and requiring maximum possible accuracy in reporting.

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