June 17, 2020
Guidance to New York State-Regulated Consumer Credit Reporting Agencies Regarding Support for New York Consumers Impacted by the Novel Coronavirus (COVID-19)
To: The Chief Executive Officers or the Equivalents of New York State-Regulated Consumer Credit Reporting Agencies
On March 11, 2020, the World Health Organization declared the spread of the novel coronavirus COVID-19 a pandemic, and both New York State and the U.S. Federal Government have declared states of emergency. Since the beginning of the outbreak, COVID-19 has caused significant financial hardship on consumers and businesses, with millions of people losing their jobs and regular source of income. As a result, a significant number of otherwise creditworthy consumers could become unable to honor their credit obligations, in part or in full, until social distancing restrictions are lifted and economic activity returns to more normal levels. Economic distress resulting from the pandemic emergency could therefore negatively impact consumers’ credit scores for reasons that are unrelated to consumers’ creditworthiness.
In response to this crisis, the Department has asked the financial services industry to take several reasonable and prudent steps to protect New York consumers’ physical and financial health and well-being, and to ensure that New York consumers are not unfairly penalized for events beyond their control. This guidance is available on the Department’s website at https://www.dfs.ny.gov/industry/coronavirus.
As New York consumers navigate these uncertain times, many with significantly diminished incomes, all New York state registered and regulated consumer credit reporting agencies have agreed to take the following reasonable and prudent actions to avoid unjustified negative impacts on consumer credit reports, which may adversely impact consumers’ credit scores:
- Allow consumers access to at least one free credit report per month for six months beginning June 1, 2020, to ensure consumers have the opportunity to quickly identify and correct incorrect information or fraudulent activity;
- Apprise furnishers, via website, e-mail, or other means, of the requirements of Section 623(a)(1)(F) of the Fair Credit Reporting Act (enacted as part of the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act), which requires that when a furnisher reaches an “accommodation” (as defined therein) with respect to one or more payments on a credit obligation or account of a consumer, and the consumer makes the payments or is not required to make one or more payments pursuant to the accommodation, the furnisher report the credit obligation or account as “current,” unless such credit obligation or account was delinquent before the accommodation, or has been charged off by the furnisher;
- If the CCRA accepts student loan information in the regular course of business, apprise furnishers, via website, e-mail, or other means, of the requirements of Section 3513 of the CARES Act, which suspends all payments due for loans made under part D and part B (that are held by the Department of Education) of title IV of the Higher Education Act of 1965 (20 U.S.C. 1087a et seq.; 1071 et seq.) through September 30, 2020, and requires that any payment that has been suspended is treated, for the purpose of consumer credit reporting, as if it were a regularly scheduled payment made by a borrower;
- Use procedures designed to permit a furnisher to report consumers who have missed or are delinquent in making payments under a credit obligation after January 31, 2020 as the result of COVID-19, but for whom no accommodation has been reached pursuant to Section 4021 of the CARES Act, to report such missed or delinquent payments under a credit obligation as forborne, deferred, affected by a natural or declared disaster, or otherwise report that the payment(s) are not due, consistent with the furnisher’s treatment of such account, and communicate the availability of such procedures to furnishers;
- If the CCRA, during its ordinary course of business, identifies credit obligations reported as delinquent following January 31, 2020 that had been marked current prior to January 31, 2020, communicate with the respective furnisher regarding such credit obligations to provide the furnisher an opportunity to verify that the reporting of such credit obligations (both retrospectively and prospectively) complies with the CARES Act, and if the credit obligations are not required to be reported as “current” pursuant to the CARES Act, remind the furnisher of its ability to report the credit obligations as forborne, deferred, affected by a natural or declared disaster, or otherwise report that the payment(s) are not due, consistent with the furnisher’s treatment of such accounts;
- If a consumer disputes the completeness or accuracy of any item of information contained in a consumers’ file at the CCRA and notifies the CCRA directly, or indirectly through a reseller, of such dispute, promptly conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate, and record the current status of the disputed information, or delete the item from the file; and
- Prominently post on their websites a link to a page dedicated to COVID-19-related information and updates.
The Department believes that reasonable and prudent efforts by consumer credit reporting agencies to recognize the unique challenges facing borrowers under these unusual and extreme circumstances are consistent with safe and sound industry practices as well as in the public interest. In addition, the Department believes that the accuracy and integrity of predictive consumer data will be enhanced by avoiding unfair derogatory marks to consumers’ credit profiles that arise from this pandemic emergency.
If you have any questions, please contact [email protected].
Executive Deputy Superintendent
Consumer Protection & Financial Enforcement Division