Nevada regulators plan to hold off enforcement of legislation that went into effect Oct. 1 until they address concerns raised in a lawsuit filed by three financial services trade groups.
The law in question is an amendment to the state’s Equal Opportunity for Credit statute that would allow lenders to use a spouse’s credit history to determine an applicant’s creditworthiness. The law applies to consumers who lack individual credit histories because their accounts were established in their spouses’ names.
The American Financial Services Association, Nevada Credit Union League, and Nevada Bankers Association claim that the law violates the Fair Credit Reporting Act (FCRA) and the Equal Credit Opportunity Act (ECOA). The lawsuit, brought against the Nevada Attorney General and the Commissioner of the Financial Institutions Division of the Nevada Department of Business and Industry, seeks to prevent the law from being enforced and to declare it invalid.
A motion filed in response to the lawsuit by the Financial Institutions Division “suggests [the agency] may hold off on enforcement until it has published regulations implementing the law, or at least while the lawsuit is pending,” Candy Burnette an attorney in McGlinchey Stafford’s Cleveland office told Auto Finance News.
“For example, the Division stated it could publish a regulation requiring a spouse or former spouse to consent to the credit pull, addressing concerns regarding compliance with the FCRA,” Burnette explained.
The enforcement delay is “good news” for lenders, Burnette said. “Regardless of the outcome of the litigation, it appears the risk of taking a wait-and-see approach to compliance is relatively low,” she added. “The division’s filings at least signal that the division will address some of the major issues with the law, through regulation or otherwise, so that companies have some practical direction on how to comply before any enforcement action is taken.”
The trade groups’ response to the motion to dismiss is due later this month.
Source : AutoFinanceNews
