The Scherzer Deal Report: March April 1-8, 2020
Here is this week’s Deal Report for private equity and venture capital activity for US-based PE and VC firms and portfolio companies, brought to you by Scherzer International.
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The CFPB issues new policy guidance on credit reporting and dispute resolution
On April 1, 2020, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) issued a non-binding general policy statement (“Policy Statement”) regarding the Fair Credit Reporting Act (FCRA) and Regulation V in light of the recently enacted Coronavirus Aid, Relief, and Economic Security Act (CARES Act).
The CFPB’s Policy Statement highlights furnishers’ responsibilities and informs consumer reporting agencies (“CRAs”) of the Bureau’s flexible supervisory and enforcement approach during this pandemic. The Bureau intends to consider the circumstances that entities face as a result of the COVID-19 pandemic and their good faith efforts to comply with statutory and regulatory obligations as soon as possible.
The Bureau believes that this flexibility will help furnishers and CRAs to manage the challenges of the current crisis. Below are examples of the flexibility the Bureau intends to provide in the consumer reporting system.
Furnishing consumer information impacted by COVID-19: The Bureau reiterates its prior guidance encouraging financial institutions to work constructively with borrowers and other customers affected by COVID-19 to meet their financial needs. While companies generally are not legally obligated to furnish information to CRAs, the Bureau encourages them to continue doing so despite the current crisis. Furnishers’ providing accurate information to CRAs produces substantial benefits for consumers, users of consumer reports, and the economy as a whole. The CARES Act, a section of which amends the FCRA, generally requires furnishers to report as current certain credit obligations for which furnishers make payment accommodations to consumers affected by COVID-19 who have sought such accommodations from their lenders. Many furnishers are or will be offering consumers affected by COVID-19 various forms of payment flexibility, including allowing consumers to defer or skip payments, as required by the CARES Act or voluntarily. Such payment accommodations will avoid the reporting of delinquencies resulting from the effects of COVID-19. The Bureau supports furnishers’ voluntary efforts to provide payment relief, and it does not intend to cite in examinations or take enforcement actions against those who furnish information to CRAs that accurately reflects the payment relief measures they are employing.
Disputes: The FCRA generally requires that CRAs and furnishers investigate disputes within 30 days of receipt of the consumer’s dispute. The 30-day period may be extended to 45 days if the consumer provides additional information that is relevant to the investigation during the 30-day period. The Bureau is aware that some CRAs and furnishers may face significant operational disruptions that pose challenges in the investigations. For example, some CRAs and furnishers may experience reductions in staff, difficulty in taking disputes, or lack of access to necessary information, rendering them unable to investigate the disputes within the timeframes the FCRA requires. Furnishers include a wide variety of businesses that vary in size and sophistication and can range from small retailers to very large financial services firms, each of which will face unique challenges due to the COVID-19 pandemic. In evaluating compliance with the FCRA as a result of the pandemic, the Bureau will consider a CRA’s or furnisher’s individual circumstances and does not intend to cite in an examination or bring an enforcement action against a CRA or furnisher making good faith efforts to investigate disputes as quickly as possible, even if dispute investigations take longer than the statutory timeframe. The Bureau reminds furnishers and CRAs that they may take advantage of statutory and regulatory provisions that eliminate the obligation to investigate disputes submitted by credit repair organizations and disputes they reasonably determine to be frivolous or irrelevant. The Bureau will consider the current constraints on furnishers’ and CRAs’ time, information, and other resources in assessing if such a determination is reasonable.
Regulatory requirements: The Policy Statement is a non-binding general statement of policy articulating considerations relevant to the Bureau’s exercise of its supervisory and enforcement authorities. It is therefore exempt from the notice and comment rulemaking requirements under the Administrative Procedure Act pursuant to 5 USC 553(b).
Resources for consumers and small businesses facing the impacts of the COVID-19 pandemic are available on the Bureau’s website at https://www.consumerfinance.gov/coronavirus/.
The Scherzer Deal Report: March 25-April 1, 2020
Here is this week’s Deal Report for private equity and venture capital activity for US-based PE and VC firms and portfolio companies, brought to you by Scherzer International.
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The Scherzer Deal Report: March 18-25, 2020
Here is this week’s Deal Report for private equity and venture capital activity for US-based PE and VC firms and portfolio companies, brought to you by Scherzer International.
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Updated: Client communication regarding coronavirus – March 20, 2020
As noted in our previous communication, disaster preparedness is an integral part of our risk management program and includes pandemic preparedness. As the “Safer at Home” emergency order went into effect for Los Angeles County on March 19, we have fully activated our business continuation plan in both our headquarters in Woodland Hills, CA and as a precautionary measure, in our Rocky River, OH office.
The plan is multi-faceted and has been designed to provide a seamless remote operation–our workforce has the training, equipment, technology support and other resources necessary to provide the quality reports and exceptional service you expect.
We are committed to doing our part to limit the spread of the virus and remain dedicated to the health, well-being, and safety of our employees and clients. And, just as importantly, we are committed to being here for you.
We recognize this is a tough situation for all of us and we wish you well during this time. Please continue to reach out to us with any questions or needs.
The Scherzer Deal Report: March 11-18, 2020
Here is this week’s Deal Report for private equity and venture capital activity for US-based PE and VC firms and portfolio companies, brought to you by Scherzer International.
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The Scherzer Deal Report: March 4-11, 2020
Here is this week’s Deal Report for private equity and venture capital activity for US-based PE and VC firms and portfolio companies, brought to you by Scherzer International.
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Client communication regarding coronavirus
At Scherzer International, we are keenly aware of the potential impact of the coronavirus (COVID-19) and are taking steps to provide for the continuity of our services and the safety of our employees. Disaster preparedness is an integral part of our risk management program and includes a viable pandemic plan. Below are some of the features of the plan and actions we are taking:
- We have the necessary equipment, as well as backup systems and technical support that will allow our workforce to work remotely in compliance with our security and other policies, and quality standards.
- We have frequent communications with our employees, which include instructing them to stay home if they feel sick, how to recognize the COVID-19 and its symptoms, social distancing, and reminders about proper hygiene.
- We are evaluating and modifying our business travel plans even to currently low risk locations.
- We stay up-to-date on the latest developments, which includes checking resources such as the Centers for Disease Control and Prevention (CDC); the World Health Organization; the Occupational Safety and Health Administration (OSHA); the Los Angeles County Public Health Department and the Cuyahoga County Board of Health.
The outbreak of COVID-19 and its threats are changing rapidly. We will provide further updates as new information is available.
Disclaimer: This communication is for general informational purposes only, and does not constitute legal advice. No recipient should act, or refrain from acting, on the basis of any information provided here without advice from a qualified attorney licensed in the applicable jurisdiction.
Q1 2020: UPDATE OF LAWS AFFECTING EMPLOYMENT BACKGROUND SCREENING
As the year and a new decade unfold, we bring you this update on ban-the-box legislation and laws that restrict credit report usage in employment decisions. And no update would be complete without a reminder about a standard-setting federal appellate opinion from 2019 interpreting the Fair Credit Reporting Act (FCRA) disclosure requirement for an employment background check.
Let’s start with a reminder
In January 2019, the Ninth Circuit’s opinion in Gilberg v. California Check Cashing Stores, LLC made clear that any extraneous information in an FCRA disclosure form regarding an employment background check — even if the information is related to state-mandated expansions of consumer rights — violates the FCRA’s requirement that the disclosure must be “in a document that consists solely of the disclosure.
Even seemingly innocuous content, such as asking for an acknowledgment that the candidate received the FCRA summary of rights or including a statement that hiring decisions are based on legitimate non-discriminatory reasons may run afoul of the FCRA. And any state and local notices regarding the background check must be provided in separate documents, as applicable to each candidate.
Experts believe that the number of class-action lawsuits brought under the FCRA for technical errors will continue to increase. But there is an easy way to comply:
Present the disclosure to the candidate in a separate, standalone, conspicuous document. Make it clear and simple. Keep it short.
Ban-the-box laws continue to proliferate
“Ban-the-box” measures – which generally prohibit employers from inquiring about a candidate’s criminal history (including performing background checks) until later in the hiring process – continue to proliferate. Currently, 14 states (California; Colorado; Connecticut; Hawaii; Illinois; Maryland (effective February 29, 2020); Massachusetts; Minnesota; New Jersey; New Mexico; Oregon; Rhode Island; Vermont and Washington) and 22 local jurisdictions (Austin, TX ; Baltimore, MD; Buffalo, NY; Chicago, IL; Cook County, IL; Columbia, MO; District of Columbia; Grand Rapids, MI; Kansas City, MO; Los Angeles, CA; Montgomery County, MD; New York City, NY; Philadelphia, PA; Portland, OR; Prince George’s County, MD; Rochester, NY; Saint Louis, MO (effective January 1, 2021); San Francisco, CA; Seattle, WA; Spokane, WA; Waterloo, IA (effective July 1, 2020 but lawsuit filed to strike down the ordinance); and Westchester County, NY) have such laws in place for private employers.
Be mindful of credit restrictions
Less popular than state and local legislatures on ban-the-box and prohibitions on salary history inquiries, credit check restrictions remain an important consideration for employers. Ten states California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington – as well as Chicago, District of Columbia, New York City, and Philadelphia all place restrictions on employers’ use of credit reports with exceptions for the use of such checks when required by law or the responsibilities of the position.
Arguably, the most imposing local credit report law to date continues to be the New York City’s Human Rights amendment that went into effect on May 6, 2015, and made requesting and using consumer credit history for hiring and other employment purposes, with certain exceptions, an unlawful discriminatory practice. The law provides that a “consumer credit report” includes “any written or other communication of any information by a consumer reporting agency that bears on a consumer’s creditworthiness, credit standing, credit capacity or credit history.”Many legal experts hold that the broad scope of this definition not only prohibits obtaining a consumer credit report but also searches of liens, judgments, bankruptcies, and financially-related lawsuits if there is no exemption. There is no case law on this matter.
On the national level, the U.S. House of Representatives on January 29, 2020, passed legislation that prohibits employers from using credit reports for employment decisions, except when required by law or for a national security clearance. The bill also prohibits asking questions about applicants’ financial past during job interviews or including questions about credit history on job applications. The U.S. Senate, however, is not expected to introduce the legislation.
The Scherzer Deal Report: Feb 26 – March 4, 2020
Here is this week’s Deal Report for private equity and venture capital activity for US-based PE and VC firms and portfolio companies, brought to you by Scherzer International.
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