On August 16, 2021, the Consumer Financial Protection Bureau (CFPB) filed a settlement proposal to resolve a 2019 lawsuit against a debt collection company and its owner.
The CFPB claims that the debt collection company violated the Fair Credit Reporting Act (FCRA) and its implementing regulations V by failing to:
- Implement reasonable written policies and procedures governing the accuracy and integrity of the information it has provided to credit reporting agencies (CRAs), particularly with respect to the company’s handling of disputes indirect; and
- Conduct reasonable investigations into indirect consumer disputes, including those related to identity theft. An indirect dispute is a dispute that a consumer submits to a CRA, as opposed to a dispute that is submitted to an information provider.
The CFPB also alleges that the collection firm continued to provide information on accounts for which statements of identity theft were filed directly with the firm before or without determining the accuracy of the information provided, which has resulted in the persistence of inaccurate information on consumer credit reports. . The CFPB also claims that the debt collection company and its owner violated the Fair Debt Collection Practices Act (FDCPA) prohibition on using false, misleading or deceptive statements in the collection of any debt when the The company informed consumers that it owed certain debts without a reasonable basis for such claims.
If the settlement is approved, it would require the debt collection company and its owner to pay a civil fine of $ 850,000 and implement policies and procedures that comply with FCRA requirements for accuracy and consistency. integrity of information provided to rating agencies. The debt collection firm would also be required to establish an identity theft report review program and develop written admissions policies and procedures to monitor litigation trends and assess accuracy. and the integrity of account information before the debt collection company begins collection.
This lawsuit follows the recent announcement by the CFPB that two final rules implementing the FDCPA will come into force on November 30, 2021. In April 2021, the CFPB proposed an extension of the dates of entry into force of the two rules for allow stakeholders affected by the COVID-19 pandemic sufficient time for implementation; however, the CFPB rescinded the extension proposal after receiving public comments from stakeholders who generally indicated that such an extension was not necessary. The first rule concerns communications with debt collectors and provides additional guidance on the FDCPA prohibitions on harassment and abuse, false and misleading statements, and unfair debt collection practices. The second rule imposes disclosure requirements on debt collectors at the start of collection communications with consumers and before reporting the information to a credit rating agency.