In response to the ongoing impact the COVID-19 pandemic has had on the financial industry, on June 3, 2020, the Consumer Financial Protection Bureau (CFPB) issued a statement (CFPB Statement) announcing that it would provide temporary flexibility for credit card issuers in connection with certain written disclosure requirements.
Under Regulation Z, credit card issuers are required to provide certain disclosures to consumers in writing. 12 C.F.R. 1026.5(a)(1). These disclosures can be provided electronically, pursuant to the Electronic Signatures in Global and National Commerce Act (E-Sign Act), if (1) the consumer has affirmatively consented to the use of electronic disclosures, known as “E-Sign Consent,” (2) prior to obtaining E-Sign Consent, the issuer provides certain disclosures to the consumer, and (3) the consumer “consents electronically, or confirms his or her consent electronically, in a manner that reasonably demonstrates the consumer can access information in the electronic form.” 15 U.S.C. 7001(c)(1)(A)-(C). The process of obtaining E-Sign Consent is often time consuming and disruptive.
The CFPB Statement notes that the process of obtaining E-Sign Consent can often result in longer telephone transactions, dropped or transferred calls, and additional calls. The CFPB acknowledged that the E-Sign Act’s requirements may impede an issuer’s ability to provide consumers with access to quick relief, especially considering the increased call volume caused by the various disruptions of the COVID-19 pandemic.
The CFPB Statement announces that during the COVID-19 pandemic, the CFPB will take “a flexible supervisory and enforcement approach” as to the required electronic provision of written account-opening disclosures, and temporary rate or fee reduction disclosures, for card issuers regulated by Regulation Z. Specifically, the CFPB will not bring an enforcement action against a credit card issuer who obtains a consumer’s E-Sign Consent during an oral telephone interaction if, during the phone call, the issuer obtains (1) “both the consumer’s oral consent to electronic delivery of the written disclosures” and (2) the “oral affirmation of [the consumer’s] ability to access and review the electronic written disclosures.” The CFPB still expects credit card issuers to take reasonable steps to confirm the consumers’ electronic contact information.
The CFPB Statement noted that this enforcement flexibility will not be applied to the other requirements of Regulation Z. This temporary enforcement approach is another effort to mitigate the impact of the COVID-19 pandemic on the financial industry by the CFPB.