(March 19, 2021) Saying it is concerned that some payments will be intercepted to cover such things as unpaid overdraft fees, the CFPB this week encouraged financial institutions (including credit unions) and debt collectors to allow the payments to reach consumers.
In a statement, CFPB Acting Director Dave Uejio said the bureau is “squarely focused” on addressing the impact of the coronavirus crisis on economically vulnerable consumers and is watching carefully the economic income payments (EIPs) to consumers authorized under the American Rescue Plan, adopted by Congress just last week. The EIPs were part of President Joe Biden’s plan to provide an economic stimulus to the country in the wake of the financial impact of the pandemic.
Uejio also noted he is staying in touch with state regulators and their efforts to protect consumer payments. He said he wants to better understand the effectiveness of those states’ efforts.
As for the payments themselves, Uejio said his agency is concerned that the funds will not reach consumers, and will instead be intercepted by financial institutions or debt collectors to cover overdraft fees, past-due debts, or other liabilities. “The Bureau will stay closely engaged on this issue as the COVID relief payment rollout continues.”
The CFPB acting director stated in the release that financial industry trade associations have told the bureau that their member institutions want to work with consumers struggling in the pandemic. “Many of these organizations have told us they have begun or soon will take proactive measures to help ensure that consumers can access the full value of their stimulus payments,” Uejio said. “If payments are seized, many financial institutions have pledged to promptly restore the funds to the people who should receive them.”
NASCUS maintains a website page outlining state wage garnishment guidance, established about a year ago with the first wave of stimulus payments under the CARES Act. The page lists the actions taken by states to shield payments from debt collectors and creditors.