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Financial Services Law Insights and Observations

CFPB, Arkansas AG settle FCRA violations

Federal Issues CFPB State Attorney General Enforcement Credit Scores Consumer Finance FCRA State Issues

Federal Issues

On August 4, in an action brought by the CFPB and the Arkansas attorney general, the U.S. District Court for the Eastern District of Arkansas entered a stipulated final judgment and order against a Utah-based home-security and alarm company (defendant) for allegedly failing to provide proper notices under the FCRA. As previously covered by InfoBytes here, according to the complaint, the company extended credit to its customers by allowing them to defer payment for alarm and security-system equipment over the life of a long-term contract. In extending credit to its customers, the company allegedly obtained and used consumers’ credit scores to determine the amount of activation fees it would charge for its products and services and then charged higher fees to consumers who had lower credit scores, without providing those consumers with required risk-based pricing notices in accordance with the FCRA and Regulation V. Under the terms of the order, the company is required to submit a compliance plan and pay a $600,000 civil money penalty, of which $100,000 will be offset if it pays that amount to settle related litigation with the State of Arkansas that is pending in state court. The company will also be required to provide proper risk-based pricing notices as required under the FCRA.

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