The Consumer Financial Protection Bureau has filed a proposed settlement, including an $850,000 civil money penalty, to resolve a lawsuit against a debt collection company and its owner.
The agency alleges that Fair Collections & Outsourcing violated the Financial Protection Act of 2010, the Fair Credit Reporting Act, and Regulation V (the Furnisher Rule) by failing to establish or implement reasonable written policies and procedures regarding the accuracy and integrity of the information it furnished to credit reporting agencies as well as failing to conduct reasonable investigations of indirect consumer disputes, resulting in inaccurate information remaining on consumers’ credit reports, the bureau said.
The CFPB also alleges that FCO and its owner, Michael Sobota, violated federal law when FCO represented that consumers owed certain debts when, in fact, FCO did not have a reasonable basis to assert that the consumers owed those debts. They also violated the Fair Debt Collection Practices Act when FCO told consumers they owed certain debts when they did not have a reasonable basis for the assertion, the CFPB said.
Under the terms of the settlement, FCO would be required to implement reasonable policies and procedures in connection with furnishing, properly review identity theft reports, evaluate reliability on accounts for which FCO collects and retain an independent consultant in addition to paying the agency’s penalty.
“As we recover from the economic devastation caused by COVID-19, credit reports play a huge role in consumers’ financial lives. Inaccurate information, such as information related to tenant debt, can be devastating for someone who’s applying for a loan, seeking a new place to live, or trying to get a new job,” said CFPB Acting Director Dave Uejio. “We will not tolerate companies that put inaccurate data on consumers’ credit reports or fail to investigate consumers’ disputes.”
FCO, which collectively comprises FCO Holding, Inc. and its subsidiaries, Fair Collections & Outsourcing, Inc., Fair Collections & Outsourcing of New England, Inc., and FCO Worldwide, Inc., is a non-bank debt collector based in Maryland. The proposed settlement seeks to resolve the CFPB’s pending lawsuit against FCO and Sobota, filed in federal district court in Maryland in September 2019.