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Financial Services Law Insights and Observations

CFPB reaches $850,000 settlement with debt collectors

Courts CFPB Enforcement FCRA FDCPA Consumer Reporting Agency Credit Report Debt Collection CFPA

Courts

On October 26, the U.S. District Court for the District of Maryland entered a stipulated final judgment and order against defendants (a debt collection entity, its subsidiaries, and their owner) in an action alleging FCRA and FDCPA violations. As previously covered by InfoBytes, the Bureau filed a complaint against the defendants in 2019 with alleged violations that included, among other things, the defendants’ failure to ensure accurate reporting to consumer-reporting agencies (CRAs), failure to conduct reasonable investigations and review relevant information when handling indirect disputes, and failure to conduct investigations into the accuracy of information after receiving identity theft reports before furnishing such information to CRAs. The Bureau separately alleged that the FCRA violations constitute violations of the CFPA, and that the defendants violated the FDCPA by attempting to collect on debts without a reasonable basis to believe that consumers owed those debts.

Under the terms of the order, the defendants—who neither admitted nor denied any of the allegations except as specified in the order—are required to, among other things, (i) update existing policies and procedures to ensure information is accurate before it is furnished to a CRA or before commencing collections on an account; (ii) ensure policies and procedures are designed to address trends in disputes; and (iii) hire an independent consultant, subject to the CFPB Enforcement Director’s non-objection, to conduct a review to ensure management-level oversight and FCRA and FDCPA compliance. The defendants must also submit a compliance plan and pay an $850,000 civil money penalty.

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