Mortgage and Student Loan Debt-Relief Companies Settle FCRA, Telemarketing Sales Rule, and UDAAP Allegations with the CFPB

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On May 18, 2020, the CFPB settled claims with a series of mortgage companies and student loan debt-relief companies (the companies), recently moving for entry of a stipulated final judgment.  The settlement resolves claims by the CFPB that the companies obtained credit reporting information from student loan debt-relief companies and used this information to market services to consumers while charging them unlawful fees.  

Part of this stipulated judgment will require the companies to pay $18.4 million in judgment and civil penalties, in addition to banning the companies from working in the debt-relief industry or using prescreened consumer reports for any purpose other than mortgage lending.  The companies will also be required to submit compliance reports to the CFPB Enforcement Director.  Reports must detail each company’s activities, and any change in obligation stemming from dissolution, assignment, sale, merger or any other action that may result in the emergence of a successor company from any of the companies included in the stipulated finale judgment.  The Companies must create documents and business records demonstrating full compliance with this stipulated judgment detailing the limited use of consumer reports, and which consumer reporting agency is providing these reports.  Companies must retain these records for 10 years after their creation and make these records available for inspection by the CFPB, upon request.

The case began when the CFPB filed a complaint in the federal court for the Central District of California on January 9, 2020, detailing allegations the companies violated provisions of the FCRA, Telemarketing Sales Rule, and CFPA.  Further analysis of the initial complaint by WBK can be found here.

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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