KDV Alert – Nationwide COVID-19 Update For Consumer Financial Services
The impact of COVID-19 on American life and businesses cannot be overstated. KDV’s Consumer Financial Services practice group is available 24/7 to answer your questions about the current regulatory environment and to help guide your business through this uncertainty.
Congress and the President recently enacted the Coronavirus Aid and Economic Relief and Security Act (CARES Act). The CARES Act contains provisions aimed at helping small businesses, including $350 billion in funds to be provided to community, financial, and healthcare institutions. The U.S. Department of Education has halted all collections actions and wage garnishments involving federal student loans through at least May 12, 2020. The CDC’s slow-the-spread guidelines have been extended to April 30, 2020.
You are encouraged to seek legal counsel before transitioning your business to working from home, as many state laws and regulations exist that govern this ability. Below is a state-by-state analysis of current executive orders and legislation addressing working-from-home, nonessential business closures, and tolling of statute of limitations. We will update you with new developments on these issues. Please contact KDV’s Consumer Financial Services professionals with any specific questions.
On March 30, 2020, the governor issued an executive order entitled “Stay Home, Stay Healthy, Stay Connected,” which was effective as of 5:00 p.m. on March 31, 2020. Under the policy, all individuals in the state of Arizona are asked to limit their time away from their residence except:
- To conduct or participate in essential activities,
- For employment, to volunteer or participate in essential functions,
- To utilize any services or products provided by essential businesses,
- Employment, if as a sole proprietor or family owned business, work is conducted in a separate office space from your home and the business is not open to serve the public.
- No person shall be required to provide documentation or proof of their activities to justify their activities under this order.
The governor’s March 23, 2020 order states that Essential Businesses and Operations include but are not limited to Healthcare and Public Health Operations, Human Services Operations, Essential Governmental Functions and Essential Infrastructure Operations as well as the following:
vii.) Financial. institutions: Banks, currency exchanges, consumer lenders, including but not limited to payday lenders, pawnbrokers, consumer installment Lenders and sales finance lenders, credit unions, appraisers1 title companies, financial markets, trading and futures exchanges, affiliates of financial institutions, entities that issue bonds, related financial institutions and institutions selling financial products.
On March 19, 2020, the governor issued a stay-at-home order requiring all Californians to stay in their place of residence “except as needed to maintain continuity of operations of the federal critical infrastructure sectors.” Non-essential businesses, including collection agencies, must close their physical locations. Businesses, including collection agencies, may continue to operate with their employees telecommuting. However, it is important to consider that there may be challenges with telecommuting regarding state and federal laws, including, the FDCPA, HIPAA, and the California Consumer Privacy Act. Legal counsel should be consulted before proceeding with working remotely.
On March 25, 2020, the governor issued an executive order requiring individuals to stay at home. Essential businesses in the financial institutions category include banks and credit institutions, insurance, payroll, and accounting services, and services related to financial markets. The minimum necessary activities to (1) maintain the value of the business’s inventory, ensure security, process payroll and employee benefits, or for related functions; or (2) facilitate employees of the business being able to continue to work remotely from their residences are allowable pursuant to this order. Any business supporting Minimum Basic Operations must comply at all times with social distancing requirements.
On March 19, 2020, the governor issued an executive order suspending “all statutory ( 1) location or venue requirements; (2) time requirements, statutes of limitation or other limitations or deadlines relating to service of process, court proceedings or court filings; and (3) all time requirements or deadlines related to the Supreme, Appellate and Superior courts or their judicial officials to issue notices, hold court, hear matters and/or render decisions. . .” The executive order also suspended “Non-Critical Court Operations.” The governor also directed all non-essential businesses and not-for-profit entities in to prohibit all in-person functions, effective Monday, March 23, 2020 at 8 p.m. The governor encouraged businesses to employ, to the maximum extent possible, any telecommuting or work-from-home procedures that they can safely employ. Essential businesses include banks, insurance companies, check cashing services, other financial institutions, and accounting services. The CT Department of Banking also has issued a “No Action Position Regarding Temporarily Working from Home due to COVID-19.” On March 25, 2020, the governor issued an executive order authorizing state agencies to extend to extend statutory regulatory administrative deadlines by 90 days.
On March 22, 2020, the governor issued modifications to his State of Emergency, ordering residents to shelter at home and closing all non-essential businesses. Non-essential businesses can conduct the minimum necessary activities to facilitate employees of the business being able to work remotely or continue to work remotely from their residences. Legal counsel should be consulted, however, before proceeding with working remotely.
On March 30, 2020, the mayor issued a stay-at-home order. This order reinforces the mayor’s direction to residents to stay at home except to perform essential activities.
Essential businesses include banks, credit unions, and related financial institutions. Businesses, including non-essential businesses, may continue telework operations consisting of employees or contractors performing work at their own residences (i.e. working from home) and home-based businesses may continue to operate to the extent such businesses do not involve individuals making physical contact with other persons and can be carried out with the order’s social distancing requirements. Essential and non-essential businesses shall take all reasonable steps necessary for employees to work remotely from their residents and to deliver services via telephone, video, internet, or other remote means. Legal counsel should be consulted, however, before proceeding with working remotely.
On April 1, 2020, the governor issued a statewide stay at home order which is effective at 12:01 a.m. on April 3, 2020. This order limits “essential services” to the list detailed by the U.S. Department of Homeland Security in its Guidance on the Essential Critical Infrastructure Workforce and any subsequent lists published. Essential services also include those businesses and activities designated by the order and its attachment which consists of a list propounded by Miami-Dade County in multiple orders. The order includes banks and related financial institutions. Legal counsel should be consulted, however, before proceeding with working remotely. The commissioner of the Florida Office of Financial Regulation issued a proclamation permitting dealers, issuer/dealers, and investment advisers to be able to establish a temporary office.
On April 2, 2020, the governor issued a shelter-at-home order. The term “Critical Infrastructure” refers to businesses, establishments, corporations, non-profit corporations, and organizations as defined by the U.S. Department of Homeland Security as “essential critical infrastructure workforce ,” in guidance dated March 19, 2020, and revised on March 28, 2020, and those suppliers which provide essential goods and services to the critical infrastructure workforce as well as entities that provide legal services, home hospice, and non-profit corporations or non-profit organizations that offer food distribution or other health or mental health services. The operation of Critical Infrastructure shall not be impeded by county, municipal, or local ordinance.
On March 23, 2020, the governor issued a proclamation requiring everyone to stay at home or in their place of residence. Individuals may travel to and from the essential businesses and operations to the extent that such businesses or operations cannot be conducted through remote technology from homes or places of residence. Essential business include financial institutions, currency exchanges, consumer lenders, including but not limited to payday lenders, pawnbrokers, consumer installment lenders and sales finance lenders, credit unions, appraisers, title companies, financial markets, trading and futures exchanges, affiliates of financial institutions, entities that issue bonds, related financial institutions, and institutions selling financial products. All businesses or operations not identified as federal critical infrastructure sectors by the Cybersecurity and Infrastructure Security Agency (CISA) or designated by the Director of Hawaii Emergency Management Agency must cease.
On March 25, 2020, the state ordered residents to self-isolate. The isolation order requires residents to stay and work from home as much as possible while ensuring all essential services and business remain available. The isolation order identifies the essential services and businesses that will remain open, including grocery stores, health care facilities, all utilities, gas stations, financial institutions.
These institutions include: banks, credit unions, and financial institutions, including processing and maintaining systems for processing financial transactions and services (e.g., payment clearing, and settlement; wholesale funding; insurance services; and capital markets activities). The Department of Finance released a “Temporary Guidance” Memo on March 12, 2020 stating that it will take no action against licensees to temporarily allow employees to work from home provided certain requirements are met to ensure data security. Legal counsel should be consulted, however, before proceeding with working remotely.
On March 20, 2020, the governor issued an executive order requiring individuals to shelter in place. Non-essential businesses and operations must cease. Businesses may continue operations consisting exclusively of employees or contractors working from home. The following businesses are essential: banks, currency exchanges, consumer lenders, including but not limited to payday lenders, pawnbrokers, consumer installment lenders and sales finance lenders, credit unions, appraisers, title companies, financial markets, trading and futures exchanges, affiliates of financial institutions, entities that issue bonds, related financial institutions, and institutions selling financial products. Legal counsel should be consulted, however, before proceeding with working remotely.
On March 30, 2020, the Department of Financial and Professional Regulation issued a “Guidance to Illinois-Licensed Debt Collection Agencies and Debt Buyers Regarding COVID-19.” The Department stated that “Although licensed debt collection agencies and debt buyers operating in the State are not listed as essential businesses under the Executive Order, non-essential businesses are allowed to continue operations consisting exclusively of employees or contractors performing activities at their own residences.” Debt collection agencies seeking to work at a location other than their address of record, including remotely, are hereby directed to provide the Department notice within 14 days of any address changes.
The Department encourages debt collection agencies and debt buyers to work with consumers to modify payment schedules or suspend all collection activity for a period of no less than 60 days. The Department also reminds licenses to adhere strictly to the requirements in the FDCPA and Collection Agency Act regarding the prohibition on communications at times and places that should be known to be inconvenient to the debtor The Department also reminds debt collection agencies and debt buyers with respect to their accuracy duties under FCRA and encourages them to use disaster codes along with any other deferment or forbearance codes for any consumer who is unable to repay their debt to mitigate the credit reporting impact of the crisis.
If an individual agent is working remotely and the brick and mortar location is not changing, the collection agency should send an e-mail with the employee name and location to email@example.com. The subject line should list “Collection Agency – Remote Work COVID.” The collection agency will need to email the agency name and 017 license number followed by the list of collectors and their addresses where they are working remotely.
On March 23, 2020, the governor issued an executive order requiring residents to stay in their homes except when they are at work or for permitted activities. The order states that all businesses and employers, whether or not they are essential, should allow as many employees as possible to work from home by implementing policies in areas such as telework and video conferencing. The following financial and insurance institutions are listed as essential businesses and operations: banks, currency exchanges, consumer lenders, including but not limited to, credit unions, pawnbrokers, consumer installment lenders and sales finance lenders, title companies, appraisers, financial markets, trading and future exchanges, payday lenders, affiliates of financial institutions, entities that issue bonds, related financial institutions, and institutions selling financial products. It also includes insurance companies, underwriters, agents, brokers, and related insurance claims and agency services. Legal counsel should be consulted, however, before proceeding with working remotely.
On March 24, 2020, the Indiana Secretary of State, Securities Division, issued remote worker guidance to all loan brokers, collection agencies, and employees licensed with the Indiana Securities Division. The Division encourages Licensees to instruct their employees to work from home and refrain from any in-person meetings whenever possible to comply with the governor’s order. The Commissioner also reminded all licensees that “relevant Indiana laws and regulations place no general prohibition on individuals employed by Licensees from performing work remotely from their personal residences.” The guidance states that “A personal residence only requires licensure as a ‘branch office’ under the Indiana Loan Broker Act or Collection Agency Act under certain circumstances. The Commissioner would not consider a temporary arrangement where an employee works from home during the COVID-19 outbreak to require licensure as a branch office. Licensees should continue to take any necessary steps to properly supervise employees working remotely and to ensure the continued protection and proper handling of their clients’ personal information. The Division reminds all Licensees and their employees to keep up to date during this crisis and conduct themselves in accordance with instructions from state and federal governmental authorities.”
The Iowa Division of Banking (“IDOB”) has relaxed Iowa law that “generally requires that licensed mortgage bankers, mortgage brokers, mortgage services, mortgage loan originators, regulated and industrial loan companies, delayed deposit services business, and money services businesses conduct business only from a licensed location approved by the IDOB. Until further notice, the IDOB will allow licensees and registrants, including licensed or registered mortgage loan originators, and their employees to work remotely from their residence or another location designated by the employer during the COVID-19 pandemic. The IDOB suggests the following best practices while working from a remote location:
- Computers and devices that leave a licensee’s authorized location(s) should include at-rest encryption.
- If paper records containing confidential information are taken off the premises of a licensee’s authored location(s), procedures must be established to secure that information at the offsite location.
- Connections to the licensee’s authorized location(s) or sensitive systems via any out-of-office device (e.g., laptop, desktop, phone, tablet) should be encrypted in transit by use of a virtual private network (VPN) or similar technology that requires a password or other form of authentication.
- Activity should be conducted in a private home environment, avoiding public areas such as coffee shops or libraries.
Louisiana Governor John Bel Edwards issued a Stay at Home Order directing all Louisiana residents to limit movements outside their homes beyond essential needs. The Order is effective at least through April 12, 2020. Pursuant to the Order, guidance for whether an activity is “essential” comes from the U.S. Cybersecurity and Infrastructure Security Agency (“CISA”) and includes:
- Workers who are needed to process and maintain systems for processing financial transactions and services (e.g. payment, clearing and settlement; wholesale funding; insurance services; and capital market activities.)
- Workers who support financial operations, such as those staffing data and security operations centers.
The Kansas Office of the State Bank Commission (“OSBC”) has provided temporary guidance allowing for licensees, registrants and their employees to work remotely from their residence or a company designated location during the COVID-19 pandemic. The OSBC identifies the following best practices to ensure the security of information:
- Computers and devices that leave the office should include at-rest encryption
- Paper records should not be taken off-site if they contain confidential information
- Connectivity to the main office or sensitive systems should be encrypted in transit by use of a virtual private network or similar technology
- Activity should be conducted in a private home environment, avoiding public areas such as coffee shops or libraries.
Governor Janet Mills issued a Stay at Home Order, effective April 2nd through at least April 30th. Essential business may remain open. Essential businesses are those labeled essential under the CISA guidelines.
On March 23, 2020, Maryland Governor Larry Hogan issued an Order closing non-essential businesses. Pursuant to the Maryland Office Of Legal Counsel’s guidance on the Order, the following financial services businesses are considered “essential businesses” which may remain open
- Banks and credit unions
- Non-bank lenders
- Payroll processing companies
- Payment processing companies
- Armored car companies
- Insurance companies
- Securities and investment companies
- Accounting and bookkeeping firms
As of March 27, 2020, the Massachusetts Attorney General has banned all collection telephone calls and the legal enforcement of unpaid debt. This ban is in effect through June 25, 2020 or until the expiration of the state of emergency, whichever occurs first. The Massachusetts Attorney General’s Office has issued guidance in the form of detailed Q&As regarding these regulations that can be found here. Massachusetts has issued an emergency order requiring all non-essential businesses to close their physical workplaces and facilities originally through April 7th, and now extended through May 4, 2020. The following are deemed essential within the financial services sector:
- Workers who are needed to process and maintain systems for processing financial transactions and services (e.g., payment, clearing, and settlement; wholesale funding; insurance services; and capital markets activities)
- Workers who are needed to provide consumer access to banking and lending services, including ATMs, and to move currency and payments (e.g., armored cash carriers)
- Workers who support financial operations, such as those staffing data and security operations centers
Michigan Governor Gretchen Whitmer has issued a “Stay Home, Safe” Executive Order directing all Michigan businesses and operations that “are not necessary to sustain or protect life” to temporarily suspend in-person operations. The Order will last at least three weeks from March 24, 2020. The Order allows for “critical infrastructure workers” which includes those financial services workers identified in CISA’s March 19, 2020 guidance.
Governor Tim Walz has issued a stay at home order which will be effective at least through April 10, 2020. Essential workers within the financial services sector include:
- Bank employees
- Credit union employees
- Insurance agencies
- Other financial services identified by CISA guidance
On March 27, 2020, the state issued guidance which explicitly provided that debt collection professionals are not covered under the essential worker exemption.
In addition, the Minnesota Department of Commerce has determined that it will not take action against any collection agency who allows their registered collectors to work from home up through April 30, 2020, so long as the following criteria is met:
- The activity is conducted from the home location of an individual working on behalf of a Minnesota licensee;
- The individual is working from home due to a reason relating to the COVID-19 outbreak and has informed the licensee of such reason;
- None of the activity will be conducted in person with members of the public from the home location; and
- The licensee shall at all times exercise supervision of the activity being performed at the home office and ensure that appropriate safeguards and controls are in place to protect consumer information and data.
On April 3, 2020, the state issued a stay at home order which will be effective at least through April 24, 2020. Essential workers are those identified by CISA guidance. The Order advises that even for offices that remain open, individuals should work from home where feasible.
Gov. Steve Bullock issued a stay at home order with requirements for essential businesses and operations. Financial and real estate services and institutions identified as essential in the order include: banks, consumer lenders, including but not limited, to pawnbrokers, accountants, consumer installment lenders and sales finance lenders, credit unions, appraisers, realtors or others providing real estate services, title companies, financial markets, trading and futures exchanges, affiliates of financial institutions, entities that issue bonds, related financial institutions, and institutions selling financial products.
Nevada Governor Steve Sisolak has mandated the closure of non-essential business through at least April 16, 2020. Collection agencies are non-essential businesses and those agencies within the state must close and cease all business through at least April 16, 2020. Moreover, all agencies located out of state, but which hold a license or certificate under Nevada Revised Statutes Chapter 649, must cease collection efforts within Nevada residents through at least April 16, 2020.
Under New Hampshire Gov. Chris Sununu’s stay at home order, all businesses and other organizations that do not provide essential services shall close their physical workplaces and facilities to workers, customers, and the public and cease all in person operations and shall not re-open to workers, customers or the public or resume in person operations before 12:01 a.m. on May 4, 2020.
Essential services include: Financial Services · Banks, financial services institutions, credit unions, insurance, payroll, regional development corporations, and accounting services · Workers who are needed to process and maintain systems for processing financial transactions and services (e.g., payment, clearing, and settlement; wholesale funding; insurance services; and capital markets activities) · Workers who are needed to provide consumer access to banking and lending services, including ATMs, and to move currency and payments (e.g., armored cash carriers) · Workers who support financial operations, such as those staffing data and security operations centers.
New Jersey Governor Phil Murphy issued an Executive Order mandating the closure of all non-essential businesses. The Order exempts “Banks and other financial institutions” as essential business may remain open.
On March 24, 2020, New Mexico Secretary of State issued an Order closing non-essential businesses. The New Mexico Regulation and Licensing Department, Financial Institutions Division, issued guidance advising that all depository and non-depository financial institutions regulated by the Financial Institutions Division are considered “essential” businesses and may remain open. The Division issued another directive stating that all businesses licensed and regulated by the financial institutions division are considered “Essential” businesses under the health department guidelines and are allowed to remain open. 100% of the state’s non-essential workforce is ordered to work from home.
The state has currently suspended collections of medical, student and some other state-owed debt for at least 30 days, until April 16, 2020. This extension may be extended. Gov. Cuomo issued an executive order mandating that 100% of employees of non-essential businesses must work or stay at home. The New York order requires collection agencies to attempt to implement remote-work procedures “to the maximum extent possible.” But, again, agencies must be mindful of the provisions of other federal and state laws when implementing telecommuting collections procedures.
Governor Cooper issued a stay at home order on March 30, 2020. The North Carolina Attorney General’s office has suspended all collections action for state-owed debts. On March 27, 2020, the state insurance commissioner issued an order activating the state of disaster, mandating debt deferrals for sixty (60) days. All collection agencies shall give their customers who reside within the state the option of deferring premium or debt payments that are due during the earlier of (i) the time period covered by the proclamation or declaration or (ii) the time period prior to the expiration of the Commissioner’s order declaring a disaster.
Ohio has issued a stay-at-home order with requirements for essential and non-essential businesses. “Essential businesses” include affiliates of financial institutions.
- Workers who are needed to process and maintain systems for processing financial transactions and services (e.g., payment, clearing, and settlement; wholesale funding; insurance services; and capital markets activities);
- Workers who are needed to provide consumer access to banking and lending services, including ATMs, and to move currency and payments (e.g., armored cash carriers);
- Workers who support financial operations, such as those staffing data and security operations centers.
According to the order, businesses, including home-based businesses may also continue operations consisting exclusively of employees or contractors performing activities at their own residences, such as working from home. Additionally, a state representative introduced a bill to the Ohio House of Representatives that would ban all debt collection in the state for the duration of the state of emergency. The bill’s future is uncertain.
Through April 16, 2020, all businesses not identified as being within a critical infrastructure sector as defined by the U.S. Department of Homeland Security (DHS) and located in a county experiencing community spread of COVID-19, as identified by OSDH on its website, shall close, according to an executive order from Gov. Kevin Stitt. Under DHS guidelines, financial services institutions considered critical are depository institutions, providers of investment products, insurance companies, other credit and financing organizations, and the providers of critical financial utilities and services that support these functions. Additional sectors may be designated as critical by Executive Order or Memorandum.
Oregon Gov. Kate Brown issued an executive order with stay-at-home-requirements and for certain business closures. Businesses should facilitate temporary work from home or telework programs to the extent possible. The order is in effect until terminated by the governor. There is a temporary work from home authorization in place from the Oregon Division of Financial Regulation.
Pennsylvania Gov. Tom Wolf issued a proclamation requiring closure of “non-life-sustaining businesses.” Enforcement actions against businesses that do not close physical locations may commence.
The proclamation states: “No person or entity shall operate a place of business in the Commonwealth that is not a life sustaining business regardless of whether the business is open to members of the public. This prohibition does not apply to virtual or telework operations (e.g., work from home), so long as social distancing and other mitigation measures are followed in such operations.”
It appears that collections operations in Pennsylvania may continue with staff working remotely, but agencies should be mindful of the challenges that telecommuting may impose under other state and federal laws. The stay-at-home order now includes all Pennsylvania counties. The order will continue through April 30, 2020.
The state has not issued any specific guidance regarding having staff work from home for debt collectors during the COVID-19 situation, according to Rebecca Specht, assistant supervisor of examinations for the Rhode Island Division of Banking. The only guidance given is for the mortgage industry, in the form of a temporary cessation of data security regulatory and enforcement actions.
The Supreme Court of South Carolina has ordered a statewide moratorium on foreclosure hearings, foreclosure sales, writs of ejectment, all matters relating to foreclosures until further order of Chief Justice.
Gov. Bill Lee issued a statewide stay at home order that is in effect until April 14, 2020.
Essential personnel and services include personnel identified on pages 5-15 of the Memorandum on Identification of Essential Critical Infrastructure Workers During COVID-19 Response issued by the Cybersecurity and infrastructure Security Agency (CISA) of the U.S. Department of Homeland Security. Financial institutions and insurance entities deemed essential includes, but are not limited to: banks, currency exchanges, consumer lenders, including but not limited to payday lenders, pawnbrokers, consumer installment lenders, sales finance lenders, credit unions, appraisers, title companies, financial markets, trading and futures exchanges, affiliates of financial institutions, entities that issue bonds, related financial institutions, institutions selling financial products, insurance companies, underwriters, insurance agents, insurance brokers, and related insurance claims and agency services.
The Tennessee Department of Commerce and Insurance announced that “[t]he Statute and Rules have been reviewed and it has been determined there is no prohibition for remote work from home as long as a branch business location is still maintained, and the location is on record on your license file. Of course, it is expected that all collection activities will remain in accordance with applicable State and Federal requirements.”
The U.S. District Court for the Northern District of Texas has suspended and tolled all deadlines, including statutes of limitations, through May 1, 2020. Note that this does not affect proceedings outside of the Northern District of Texas.
The Supreme Court of Virginia has tolled all deadlines, including statutes of limitations, through April 6, 2020. Virginia Gov. Ralph Northam has issued a stay at home order. The order goes into effect immediately and lasts until June 10, 2020. This restriction does not apply to the operation of businesses not required to close to the public under Executive Order 53. Essential business include banks and other financial institutions with retail functions.
The collection agency board for Washington State will be sending guidance in the coming days. Gov. Jay Inslee’s stay-at-home order, in effect through May 4, 2020 states essential businesses are prohibited from operating unless they establish and implement social distancing and sanitation measures. The governor’s order also issued a statewide hold on evictions for non-payment or where the tenancy has ended, until April 17, 2020.
Stay at home orders have issued and both the statewide and Milwaukee Orders include licensed financial service providers in the list of essential businesses. Agencies licensed by the Wisconsin Department of Financial Institutions should be considered essential businesses under both orders, however, agencies are encouraged to seek their own legal clarification and to use their best judgment when operating under this order. For sixty (60) days from March 22, 2020, mortgagees are prohibited from commencing civil actions to foreclose upon real estate, and from requesting or scheduling a sheriff’s sale of the mortgaged premises; sheriffs may not act on any order of foreclosure or execute any writ of assistance related to foreclosure.
West Virginia Gov. Jim Justice issued a stay-at-home order and guidance on essential and non-essential businesses. Professional debt collectors are deemed essential under the order and may continue to operate.
State regulations do not prevent licensees and collectors from teleworking, etc., but there are things they cannot do such as print information from the Nationwide Multistate Licensing System. Additional guidance in a memo from the department’s chairman and attorney will be available soon.
KDV’s Consumer Financial Services practice group will continue to monitor this situation as it unfolds. Please contact us with any questions.