August 20, 2021

Debt Collector’s Alleged Failure To Conduct Due Diligence And Ensure Accuracy In Credit Reporting Leads To $850,000 Settlement

Lori Kalani, Bernard Nash

Cozen O'Connor

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The Consumer Financial Protection Bureau (“CFPB”) reached a settlement with debt collection company Fair Collections & Outsourcing Holdings, Inc. and its owner and related entities (collectively “FCO”) to resolve allegations that FCO attempted to collect debts without adequate due diligence on the accuracy of the debt account information and that it furnished inaccurate information to credit reporting agencies, conduct which violated the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as the Fair Reporting Act and its implementing regulation, Regulation V.
The complaint alleged, among other things, that FCO attempted to collect on debts without having a reasonable basis for asserting that consumers owed those debts and that it failed to conduct reasonable investigations of consumer disputes of debts, resulting in inaccurate information remaining on consumers’ credit reports. In addition, the complaint alleged that FCO did not have reasonable policies and procedures in place to ensure the integrity and accuracy of information it furnished to credit reporting agencies.
Under the terms of the proposed stipulated order, FCO will pay a civil money penalty of $850,000 to the CFPB. FCO also agreed to implement reasonable policies and procedures regarding the accuracy and integrity of the information it furnishes to credit reporting agencies, establish an identity theft report review program to properly address consumer reports of identity theft, and establish policies and procedures to evaluate the quality and completeness of received account information prior to commencing collections. In addition, FCO will be required to retain an independent consultant approved by the CFPB to conduct a review of FCO’s information-furnishing and debt-collection activities, among other things.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.