CFPB settles with Security Group over improper collections

The Consumer Financial Protection Bureau announced a consent decree with Security Group, Inc., for improperly aggressive collections of consumer debts.

The Consumer Financial Protection Bureau announced a consent decree with Security Group, Inc., for improperly aggressive collections of consumer debts.

In the consent order, the bureau alleges that Security Group violated both the Consumer Financial protection Act and the Fair Credit Reporting Act. Under the terms of the consent order, Security Group and its subsidiaries are barred from certain collection practices, must correct certain inaccurate information about consumers they furnished to credit reporting agencies, and pay a $5 million penalty.

The CFPB found that Security Group was making “improper in-person and telephonic collection attempts.” The CFPB said Security Group’s practices were improper because they could result in financial information being revealed to employers and others. According to the consent order, such disclosures were “likely to cause consumers substantial injury, including humiliation, inconvenience, and reputational damage ranging from unwanted attention to disclosure of their delinquent debt to disciplinary action and other negative employment consequences.”

The CFPM said that over a 5-year period, Security Group made or attempted to make12 million in-person collection visits to more than 1.3 million consumers. Security Group visited consumers’ homes and places of employment, as well as the homes of their neighbors, to collect or attempt to collect delinquent debt. In some instances, Security Group also visited consumers in other public places to collect or attempt to collect debt. The consent order cites several examples, including discussing debts with consumers and taking payments from consumers where third parties could see or overhear, such as on a doorstep within earshot of neighbors, on a speakerphone in public, in the middle of a grocery store, through drive-thru windows at fast food restaurants, and in the checkout line at a big-box retailer. In some cases, Security Group threatened consumers with jail, shoved them, or physically blocked a consumer from leaving private property. In addition, Security Group reported erroneous information to credit report bureaus and failed to investigate disputes initiated by consumers.

“Any marginal benefit in the form of more recoveries is outweighed by the substantial injury to consumers,” the CFPB said in the consent order. CFPB Acting Director Mick Mulvaney said in a press conference that debt collections would be a focus of the bureau under his leadership. Mulvaney said there were 407,000 complaints against debt collectors since the bureau was created, and that half of them did not respond to complaints lodged by consumers. “That is a red flag to me,” he said. “If you’re not willing to respond to the complaint, that’s a problem.”