Credit Reporting for Members Affected by Natural or Declared Disasters

3/31/2020

Questions have come up about the impact COVID-19 will have on members’ credit histories. The Consumer Data Industry Association and its credit bureau members have answers. For years, the credit bureaus have had systems in place to minimize or eliminate the negative impact of extreme events such as natural disasters or even a pandemic.

The CDIA maintains a webpage which provides COVID-19 resources and guidance for furnishers who report information about consumers where (1) consumers’ accounts are affected by natural or declared disasters, or (2) consumers’ accounts are placed in forbearance as a result of a natural or declared disaster.

Credit unions should also remember that while the Fair Credit Reporting Act (FCRA) does not actually require furnishing of information, it does require that any information you do furnish is accurate.

Question of the Week

Q. What should be done if an IRS refund direct deposit went into an account that doesn’t belong to the intended recipient?

A. This will depend on where the error occurred. But, in all cases, the person who received the deposit in error is not entitled to the funds.

If the credit union made the error, then per Regulation E, the credit union must correct the error.

If the IRS made the error, the person who filed the tax return needs to contact the IRS customer service at 800.829.1040. The IRS will issue a recall of the direct deposit and send the return filer a new refund by check.

If the filer entered the incorrect routing or account number, then the IRS assumes no responsibility for tax preparer or taxpayer errors and will not provide any help in this situation. It is the responsibility of the person filing the return to verify the account and routing number and double check for accuracy. While the IRS suggests the filer work directly with the respective financial institution to recover the funds, the credit union also has no responsibility for the error. Due to privacy, you are not allowed to provide any information concerning the member whose account the payment went into. You can possibly work as an intermediary, but ultimately this is a civil issue between the filer and the person whose account they directed the payment to be made to.

Related Links

12 CFR 1005.11

IRS FAQ Refund Inquiries – IRS error

IRS FAQ Refund Inquiries – Wrong Account Number

Legal Briefs

National Credit Union Administration (NCUA)

Responsible Small-Dollar Lending in Response to COVID-19
The NCUA and other federal financial institution regulators released an interagency statement that expressly encourages credit unions to offer responsible small-dollar loans to consumers and business members.

Identification of Essential Critical Infrastructure Workers During COVID-19
The NCUA issued a letter to help provide credit unions with guidance for identifying critical infrastructure workers during the COVID-19 pandemic.

Streamlined CDFI Application Round Opens March 29
Federally insured, low-income credit unions that want to become certified Community Development Financial Institutions can apply to use the NCUA’s qualification process for streamlined CDFI certification beginning March 29.

NCUA Hosts March 31 Webinar on COVID-19 Response
Federally insured credit unions can learn more about the agency’s response to the COVID-19 outbreak by participating in a webinar hosted by the NCUA on Tuesday, March 31.

NCUA Chairman Hood Released Statement that the CARES Act Will Provide Needed Relief
Chairman Hood released statement.

Consumer Financial Protection Bureau (CFPB)

CFPB Resources for Consumers During COVID-19 Outbreak
The CFPB recently released several resources to help consumers take steps to protect their finances during the COVID-19 pandemic, including how to avoid financial scams and submit complaints to the CFPB.

CFPB Provides Flexibility During COVID-19 Pandemic
The CFPB announced that it is providing flexibility and postponing some data collections including the quarterly credit card and prepaid account updates.

Federal Financial Institutions Examination Council (FFIEC)

COVID-19 and the American Workplace
The FFIEC issued a press release regarding financial regulators efforts to address COVID-19. The agencies understand that financial institutions may need additional time to submit their call reports and will not take action against any institutions for submitting its March 31 call report after the filing deadline, as long as the report is submitted within 30 days of the official filing date. Institutions are encouraged to contact their primary federal regulator in advance of the official filing date if they anticipate a delayed submission.

NACHA

ACH Operations Bulletin #5-2020
NACHA released ACH Operations Bulletin #5-2020 which provides relief to RDFIs on signature requirements for written statements of unauthorized debits.

U.S. Department of Labor (DOL)

COVID-19 and the American Workplace
The DOL released FFCRA posters and guidance. The posters will need to be posted by April 2.

Washington State Department of Financial Institutions (DFI)

Essential Business Guidance – Real Estate and Mortgage Transactions
The DFI has guidance for real estate and mortgage transactions during the COVID-19 emergency. The guidance provides limitations intended to comply with the Stay Home, Stay Healthy Proclamation.

Office of Foreign Assets Control (OFAC)

OFAC has updated the SDN list as of March 26. The last update prior to this was March 19.

Questions? Contact the Compliance Hotline: 1.800.546.4465; compliance@nwcua.org.

Posted in Compliance, Compliance News.