CFPB Files Complaint Against Debt Collector and its Owner for Alleged Violations of CFPA, FCRA and FDCPA

The CFPB recently sued a multi-housing industry debt-collection company and its affiliated entities in the U.S. District Court of Maryland for alleged violations of the CFPA, FCRA, Regulation V, and the FDCPA.  The company’s owner was also personally named in the CFPB Complaint.

The suit includes allegations that (i) the company failed to maintain reasonable policies and procedures regarding the accuracy and integrity of consumer information furnished to consumer reporting agencies (CRAs), including the handling of consumer disputes; (ii) failed to conduct reasonable investigations of consumer disputes; (iii) failed to cease furnishing information that allegedly resulted from instances of identity theft before investigating the accuracy of the information; and (iv) collected debt without a reasonable basis to assert it was owed.

FCRA provides the mechanisms of (i) an “indirect dispute” for consumers to dispute information furnished to the consumer reporting agencies, and (ii) a “direct dispute,” for the dispute to proceed directly with a furnisher.  The CFPB alleges the company failed to provide adequate staffing, training, and guidance to offshore employees primarily responsible for handling indirect disputes.

According to the Complaint, the company furnishes consumer information about approximately 500,000 debt collection accounts to the CRAs, and during 2016-2017, only four off-shore employees of the company were responsible for handling approximately 10,000 disputes per month.

The company provided a manual to its employees, ostensibly to support them in handling indirect disputes, but the CFPB alleges the manual was not reviewed or updated for a number of years, and the instructions provided in that document did not comport with Regulation V of FCRA.  An Appendix to Regulation V provides guidelines for, inter alia, ensuring that reasonable investigations of consumer disputes are undertaken along with appropriate actions based on the results of those investigations, but these guidelines were allegedly not incorporated in the company manual.

With respect to the FDCPA, specifically, the Complaint alleges that in numerous instances, the company made false, deceptive, or misleading representations including by reliance upon past consumer account histories without obtaining information to substantiate claims that certain consumer debts were still owed.

The Complaint seeks an injunction against future violations and civil money penalties, among other requested relief for affected consumers.