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Federal Register / Vol. 86, No. 16 / Wednesday, January 27, 2021 / Notices
have believed that they did not need to take any actions until the forbearance periods ended. However, these consumers in fact needed to make payments or, at a minimum, talk with representatives to resolve the issues.
3.4

Credit Card Account Management
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Market Response to Consumers &
Industry Challenges Credit card issuers generally provided some form of relief to consumers experiencing hardships as a result of the COVID19 pandemic. The most common relief was allowing consumers to skip a payment or to defer payments for one to six months. While some issuers waived interest along with payment deferrals, interest continued to accrue on accounts at most issuers.
Other relief options included lowered interest rates, waivers of annual and other fees, and extended deferred interest periods for credit card accounts that already had deferred interest on certain purchases. A few issuers made changes to manage credit risk. Some issuers tightened underwriting standards, stopped proactive scorebased credit limit increases, reduced credit limits, or closed some accounts.
Some issuers also halted marketing campaigns to acquire new accounts and paused direct marketing campaigns due to uncertainty in the market.
Issuers generally experienced some operational challenges as a result of the COVID19 pandemic, such as increased call volume. The compliance-related challenges included:
Difficulty in meeting written disclosure timing requirements; or obtaining necessary consumer consent for electronic disclosures e.g., for change-in-terms letters and statement messaging;
Meeting regulatory requirements to address customer disputes, sometimes resulting from business partner and merchant closures; and Adjustments in regular monitoring and testing schedules for credit card operations.
In responding to challenges, some issuers deployed their existing disaster preparedness and business continuity management plans to address some of the operational challenges related to the COVID19 pandemic. However, several issuers had to modify existing programs and business line processes, and revise policies and procedures to respond to the unique operational challenges posed by the COVID19 pandemic.
Consumer Risk Examiners review of issuers PA
responses indicated several issues that
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raise the risk of consumer harm. These issues are described below.
Implementation and System Deficiencies Certain issuers reported problems implementing relief programs, and these problems may have caused consumer harm. These issuers relied on manual processes to handle high volumes of requests for relief and did not provide adequate employee training about relief programs.
Some issuers that used manual processes to handle the high volumes of requests for relief reported significant backlogs in processing such requests.
Due to these backlogs, accounts became delinquent between the time of consumers requests for relief and the actual processing of requests, exposing consumers accounts to potential negative credit reporting, charge-offs, or account closures.
In some instances, consumers who requested relief were erroneously told that they would receive immediate relief as of the date of their request. In fact, these consumers would not receive relief until the consumers request was manually entered into the issuers system, which occurred days, or even weeks, later. In some cases, consumers were never manually enrolled in relief programs. Consequently, fees and interest that were supposed to be waived, along with the payment deferrals, were not waived.
Some issuers also reported that employees provided inaccurate information to consumers in order to collect payments from them. For instance, representatives told consumers that they had to pay their past due amount to enroll in the payment deferment program when in fact, paying the past due amount was not a requirement for enrollment.
Auto Pay Process Deficiencies Several issuers advised consumers who requested to skip or defer credit card payments pursuant to a pandemic relief program that they must adjust or separately cancel any preauthorized credit card payments including preauthorized transfers from an external financial institution that were set up to make their periodic credit card payments. Examiners observed that the instructions given to consumers in certain cases, including going through additional steps to cancel or defer payments after completing the pandemic relief request process, posed a risk of consumer harm.
Some issuers did not immediately suspend preauthorized transfers upon enrolling consumers in pandemic relief
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programs, despite making representations to consumers that payments would be suspended as of the date the consumer enrolled. Rather, the issuers systems were programmed to suspend preauthorized transfers as of the date that the consumers request for relief was manually processed by the issuer. Because of processing backlogs, suspension of transfers did not occur until several days or weeks after the consumers oral request. Due to these processing backlogs, examiners observed that several consumers accounts were debited in error.
Timing of Delivery of Disclosures At several issuers, some consumers who had not previously opted to receive electronic disclosures requested COVID19 relief telephonically. For these consumers, the issuers had no practical way to provide written disclosures without delaying relief or obtaining the consumers consent to electronic disclosure. Rather than delay relief, the issuers provided immediate relief to cardholders and delivered written disclosures by letter or statement notice.9
Billing Disputes Some issuers reported that they failed to resolve billing disputes by the regulatory deadline. This failure was attributed to the increased volume of error notices and merchant closures which increased the amount of time to investigate and resolve such errors.
3.5 Consumer Reporting and Furnishing Consumer reporting plays a critical role in consumers financial lives. CRCs assemble or evaluate consumer information for the purpose of furnishing consumer reports to third parties. Such consumer reports can determine a consumers eligibility for credit cards, car loans, and home mortgage loansand they often affect how much a consumer is going to pay for that loan. Furnishers of information provide information to CRCs and thus play a crucial role in the accuracy and integrity of consumer reports. Inaccurate information on consumer reports can lead to market harm. For example, inaccurate information on a consumer report can impact a consumers ability to obtain credit or open a new deposit or savings account. Moreover, furnishers have an important role when consumers dispute the accuracy of information in 9 CFPB. May 13, 2020. Open-End not HomeSecured Rules FAQs related to the Covid19
Pandemic, available at: https files.consumer finance.gov/f/documents/cfpb_faqs_open-end-rulescovid-19_2020-05.pdf.

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