CFPB Settles with Telecommunications Debt Collector for Alleged FCRA and CFPA Violations

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On November 12, 2020, the Consumer Financial Protection Bureau (CFPB) announced ​​that it had entered into a consent order with an Illinois-based debt collector that collects debts on behalf of telecommunications companies and furnishes consumer-account information to credit reporting agencies.

The CFPB alleged that the debt collector violated the Fair Credit Reporting Act (FCRA) and the Consumer Financial Protection Act (CFPA) by furnishing information to consumer credit reporting agencies that it knew or had reason to believe was inaccurate; failing to provide credit reporting agencies the date a delinquency commenced; failing to conduct reasonable investigations of consumer disputes; failing to provide notices to consumers that their disputes were frivolous or irrelevant and would not be investigated; and failing to maintain reasonable policies and procedures to ensure accuracy in reporting.

According to the CFPB, the debt collector used an automated system to furnish information to credit reporting agencies.  The system’s furnishing logic incorrectly translated some account files into the format used for reporting, resulting in inaccurately reported information.  Furthermore, the consent order states that the debt collector had not regularly updated its policies and procedures for continued effectiveness, and it did not distinguish between FCRA and Fair Debt Collection Practices Act (FDCPA) disputes.

The consent order requires the debt collector to pay $500,000 in civil penalties to the Bureau. The consent order also requires the debt collector to implement steps aimed at improving the alleged inaccuracies of its furnishing and its policies and procedures.

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.

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