April 27, 2023 – Jonathon D. Nelson, General Counsel for Dedicated Financial GBC
Debt collectors are in the news again. According to the Consumer Financial Protection Bureau (CFPB), they recently settled claims with one of the largest debt collectors in the nation. The CFPB’s claims arise from alleged violations of a 2015 CFPB order in addition to other violations of law. CFPB Director Rohit Chopra commented on the pending settlement by stating that the debt collector was “caught red-handed in 2015” and “continued violating the law through intimidation, deception, and illegal debt collection tactics and lawsuits.”
The 2015 order required the debt collector to pay more than $27M in refunds and penalties for deceptive debt collection practices. That order was based on findings of collections on unsubstantiated debt, filing misleading affidavits in lawsuits, and making misrepresentations to consumers. In addition to the monetary components of the 2015 order, the debt collector was commanded to cease collecting debts without a reasonable basis, cease selling debt, and cease making misrepresentations.
The CFPB’s recent allegations concern the 2015 order, plus the Fair Debt Collection Practices Act (FDCPA), Consumer Financial Protection Act (CFPA), and Fair Credit Reporting Act (FCRA). The FDPCA and CFPA impose minimal standards upon companies engaged in debt collection, including the requirement that a debt collector provide a verification of a debt upon request. The FCRA governs credit reporting and outlines processes that must be followed when a consumer initiates a dispute.
Making representations on unsubstantiated debt, commencing lawsuits on unsubstantiated debt, misrepresenting facts, and failing to timely provide required documentation all constitute violations of the FDCPA and CFPA. Once a credit dispute is initiated, it would be a violation of the FCRA to conduct an unreasonable investigation, fail to inform a consumer of the investigation outcome, and fail to timely resolve the dispute. The CFPB accused this large debt collector of committing all of these violations, and the debt collector settled the accusations.
The recent pending settlement, if approved by a court, would require the debt collector to pay over $12M to consumers, pay $12M in penalties to the CFPB, and comply with the aforementioned federal laws by taking specific action to address the CFPB’s accusations. Interestingly, that debt collector’s website claims that they “[are] making repayment fair and affordable,” and that they “help [their] customers resolve their debt with [the debt collector].”
Their website also states that they are “[a] respected name in debt collection.” They cite to two certifications to support their statements, and then continue on to conclude that they “treat [their] customers with fairness & respect.” However, their Google reviews tell a different story, averaging a rating of 3.55 stars across six of their locations shown on Google, and comments such as “I was lied to, threatened, and harassed.” Another person gave a 1-star review and said “BAD Company, Filing with BBB & looking into an attorney.” A glance at the debt collector’s BBB profile reveals that no customer reviews nor complaints are available to view because the debt collector is updating their profile.
Are the CFPB’s allegations accurate? Or do you believe the statements on the debt collector’s website? The truth is likely somewhere between what the CFPB and debt collector have respectively said publicly.
A company’s Google reviews and BBB profile oftentimes paint an accurate picture of how a company operates. For this debt collector, they earned a middle-of-the-road rating on Google. They are also set to pay over $51M in the last eight years due to complaints filed against them by consumers.
Imagine how a debt collector with a lower Google review rating operates. Then consider the impact on the debt collector’s clients. Do you truly know your debt collection vendor?
“Trust but verify.” ~ Ronald Reagan