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State AGs, U.S. senators urge CRAs to protect credit scores during Covid-19 crisis
On April 28, New York Attorney General Letitia James and Pennsylvania Attorney General Josh Shapiro, along with the attorneys general of 19 other states and the District of Columbia sent letters to the three credit reporting agencies (CRAs) stating their intention to protect consumer credit and ensure fair and accurate reporting on consumer credit reports during the Covid-19 crisis. The letter calls attention to the obligations of the CRAs under the FCRA and state credit-reporting laws and further states that the attorneys general intend to enforce compliance of all related requirements. Notwithstanding the CFPB’s announcement that it will ease the FCRA’s 30 or 45-day time restrictions for CRAs to investigate consumer complaints, the letter insists that the attorneys general will enforce the FCRA deadlines. Pursuant to the CARES Act amendment of the FCRA—which requires that consumer accounts be reported by furnishers as current if the consumer was current prior to the grant of a CARES Act accommodation—the letter asserts that its signors will actively monitor for compliance to this amendment. Finally, the letter expresses appreciation for the CRAs’ compliance and cooperation.
On April 27, Senator Elizabeth Warren (D-MA) and Senator Brian Schatz (D-HI) sent letters to the same CRAs also urging the agencies to protect consumer credit reports by complying with the CARES Act amendment to the FCRA. In addition, the Senators request that the CRAs reply to six questions included in the letters to assist the Senators in understanding all efforts the CRAs are taking to protect consumer credit scores during the Covid-19 crisis.
SEC releases agenda for Small Business Capital Formation Committee meeting
On April 28, the SEC released the agenda for the May 8, 2020, meeting of its Small Business Capital Formation Advisory Committee, which will be hosted via video conference. The committee will discuss the capital formation proposal and how small businesses are coping with Covid-19, among other topics.
SBA issues IFR on PPP loan disbursement requirements
On April 28, the Small Business Administration (SBA) issued an interim final rule (IFR) regarding disbursements under the SBA’s Paycheck Protection Program (PPP). The IFR explains that PPP lenders must fund loans to approved small businesses—those that were issued an SBA loan number—in one disbursement. Borrowers may not request multiple disbursements to delay their eight weeks of coverage. Further, the start date for the eight weeks of coverage for any loans that were approved but are not fully disbursed is the date of the first disbursement. The IFR makes clear that funds must be disbursed within 10 days of a borrower’s loan approval date, and that the 10 days starts on April 28 for any loans that were previously approved but not disbursed prior to the issuance of the IFR. PPP lenders are not responsible for disbursement delays based on the failure of the borrower to submit required documents, and a borrower’s loan will be cancelled if all required documents are not submitted within 20 days of loan approval. The IFR further instructs that in order to receive the lender processing fee, PPP lenders must disburse each loan and submit SBA Form 1502 within 20 days of loan approval. As this form has not yet been released, the deadline for submitting the form for previously approved loans is May 18. The IFR states that lenders will not receive the processing fee for loans that are: (i) cancelled by the borrower prior to disbursement of loan funds; or (ii) cancelled and repaid by the borrower after disbursement of loan funds. The IFR is effective immediately, and comments must be submitted by June 3.
U.S. Supreme Court announces May oral arguments to be delivered via teleconference
On April 28, the U.S. Supreme Court announced that on May 4-6 and 11-13, the Court will hear a number of the oral arguments that were previously postponed for March and April due to the Covid-19 pandemic. Counsel will present arguments to the Court via telephone conference as the Chief Justice prompts them, and the next case will follow immediately after the first ends.
SEC charges company and CEO for misleading statements concerning N95 masks
On April 28, the SEC announced that it filed suit in the U.S. District Court for the Southern District of Florida against a company and its CEO (defendants) for violating the Securities Exchange Act of 1934 by making false and misleading statements concerning their ability to source and supply N95 masks for the Covid-19 virus. The SEC alleges that the defendants’ actions sought to mislead investors because they “never had either a single order from any buyer to purchase masks, or a single contract with any manufacturer or supplier to obtain masks, let alone any masks actually in its possession.” Following regulatory inquiries (and an SEC March 26 order that temporarily suspended trading in the securities of the company), the SEC alleges in the complaint that the CEO issued a press release stating that the company never had masks available to sell. The SEC seeks injunctive relief and civil penalties against the defendant, as well as an officer-and-director bar against the CEO.
HUD OIG issues Covid-19 guidance to homeowners
On April 28, the Department of Housing and Urban Development’s Office of Inspector General issued a bulletin outlining Federal Housing Administration guidance to servicers and borrowers regarding implementing the forbearance requirements of the CARES Act. The office issued the bulletin based on a review of information that the top 30 FHA mortgage servicers provide on their websites, which the office found to be incomplete, outdated, inconsistent, or unclear.
FTC releases 2019 Annual Highlights
On April 23, the FTC released its 2019 Annual Highlights, which outlines the Commission’s efforts over the past year to protect consumers and promote competition. The report discusses various enforcement actions, policy and advocacy initiatives, and education and outreach programs, and notes that FTC actions in 2019 have led to more than $232 million in refunds to consumers. The report covers a range of consumer protection enforcement actions related to, among other things, unfair and deceptive marketing as well as privacy and data security issues. The report also discusses joint consumer protection enforcement-related efforts with foreign agencies and multilateral organizations, as well as information-sharing and enforcement cooperation measures intended to streamline and facilitate joint law enforcement investigations. In addition, the report highlights recent policy actions, such as advocacy comments, amicus briefs, and Congressional testimony, and discusses education efforts undertaken in 2019 including: (i) a series of public hearings on Competition and Consumer Protection in the 21st Century; (ii) workshops with state regulators and law enforcers; (iii) workshops on consumer protection issues such as small business financing, consumer reporting accuracy, and privacy matters; and (iv) education outreach programs. According to the stats and data section of the report, the FTC received more than 3.2 million consumer reports in 2019, in which identity theft and imposter scam complaints represented over 40 percent of the total reports received.
SEC’s Investor Advisory Committee to hold remote meeting
The Investor Advisory Committee of the Securities and Exchange Commission will hold a remote public meeting on May 4 via a live webcast. The meeting will focus on public company disclosures in light of the Covid-19 outbreak and on public company shareholder engagement and meetings by virtual means.
CFPB eases filing deadlines for certain ILSA and Regulation J reports
On April 27, the CFPB released guidance in order to provide “flexibility and reduce administrative burden” for land developers that are subject to the Interstate Land Sales Full Disclosure Act (ILSA). The Bureau explains that in light of the impacts of Covid-19, it will not take supervisory or enforcement action against land developers for delays in filing financial statements and annual reports of activity, as long as the developers make good faith efforts to submit filings “within a reasonable time.” The guidance notes that all other ILSA and Regulation J requirements must be timely met.
CFPB asks FCC to allow financial institutions to make certain Covid-19-related calls
On April 27, the CFPB sent a letter to the FCC in support of a petition filed at the end of March by several financial trade associations, which seeks an expedited ruling to allow financial institutions to make certain automated calls concerning Covid-19 relief options without violating the TCPA. The CFPB specifically encouraged the FCC to allow a limited number of automated Covid-19-related calls from financial institutions that would alert customers of offers of forbearance, payment deferrals, fee waivers, extensions or relaxations of repayment terms, loan modifications, and other resources related to loans secured by homes or vehicles. “Allowing financial institutions to make automated calls is one more way to maximize the outreach to ensure consumers receive important and timely information,” CFPB Director Kathy Kraninger noted, cautioning, however, that financial institutions must still comply with other legal requirements with respect to their communications with customers, including the Bureau’s mortgage servicing rules and Dodd-Frank’s prohibition on unfair, deceptive, or abusive acts or practices.