On June 3, 2020, the Consumer Financial Protection Bureau (CFPB) issued a Statement on Supervisory and Enforcement Practices Regarding Electronic Credit Card Disclosures in Light of the COVID-19 Pandemic (“Statement”) under the Truth in Lending Act (TILA), its implementing Regulation Z, and the Electronic Signatures in Global and National Commerce Act (E-SIGN Act). Regulation Z generally requires written account-opening disclosures to be delivered before the first transaction is made on the plan and written promotional disclosures to be provided prior to the start of a promotional period. The CFPB’s Statement provides temporary supervisory and enforcement flexibility for credit card issuers regarding the electronic delivery of account-opening disclosures and temporary rate or fee reduction disclosures during the COVID-19 pandemic.
Specifically, the Statement pertains to oral telephone interactions where a card issuer may seek to open a new credit card account for a consumer, to provide certain temporary reductions in APRs or fees applicable to an existing account, or to offer a low-rate balance transfer. While Regulation Z requires written disclosures to a consumer, the E-SIGN Act allows for disclosures to be provided electronically subject to certain conditions, including: (1) obtaining a consumer’s affirmative consent to the electronic delivery; (2) providing certain disclosures required by the E-SIGN Act to the consumer prior to obtaining the consumer’s consent; and (3) obtaining the consumer’s electronic consent in a manner that reasonably demonstrates that the consumer can access the information that is the subject of the consent. The E-SIGN Act also provides that oral communications are not electronic records for purposes of the E-SIGN Act’s consumer disclosure provisions, precluding card issuers from obtaining a consumer’s consent orally to electronic delivery of written electronic disclosures.
Citing credit card issuers’ increased call volume and potentially reduced staffing during the pandemic, as well as the goal of providing consumers with quick relief, the CFPB’s Statement provides that the agency “does not intend to cite a violation in an examination or bring an enforcement action against an issuer” that does not obtain a consumer’s E-SIGN consent to the delivery of certain written disclosures during a telephone interaction with a consumer. However, the issuer must obtain both the consumer’s oral consent to electronic delivery of the written disclosures and oral affirmation of the consumer’s ability to access and review the electronic written disclosures. In addition, issuers will be expected to “take reasonable steps” to verify a consumer’s electronic contact information, for example, by “clearly and understandably” reading a consumer’s newly provided email address for verification or stating a consumer’s on-file email address in order for the consumer to verify its accuracy. The Statement also clarifies that the agency does not intend to provide similar supervisory and enforcement flexibility for other requirements of Regulation Z, such as the billing error resolution requirements, ability to pay requirements, or account termination requirements. Nonetheless, the Statement provides meaningful flexibility as card issuers seeks to serve their consumer customers in the midst of this challenging period.