In the News: CFPB Shuts Down Debt Collector for Violating FCRA Rules
Written by: Heather Papows – Senior Consultant, Loan Servicing & Secondary Market
On Friday, the CFPB issued an order against Commonwealth Financial Systems, Inc for violations of the Fair Credit Reporting Act, after finding that the company failed to establish and implement reasonable written policies and procedures, failed to conduct reasonable investigations of disputes, and misrepresented to consumers that they owed alleged debts when in some cases they lacked reasonable basis to make those representations. The CFPB’s order permanently shut down this Pennsylvania-based medical debt collecting agency, requiring consumer credit reporting companies to delete all previously reported information, permanently banning the company from participating in any debt collection activities, and imposing a $95,000 fine. [1]
The actions taken against Commonwealth Financial Systems demonstrate the severity of a violation, whether intentional or not. Take this enforcement action as a warning sign, and make certain you’re buttoned up in the following ways:
Ensure you have clear, accurate, and complete written policies and procedures that reflect the requirements of the most current guidelines and are a true representation of your current processes.
Validate that the person(s) responsible for reviewing and responding to credit reporting disputes is monitoring and completing these in a timely and accurate manner.
If you utilize a third-party such as e-Oscar for your credit reporting corrections and dispute resolution, review the notifications settings, ensure all company numbers are set up properly, and that all disputes received are properly researched, documented, and responded to. Do you have a process in place for second-review oversight?
If you utilize a third-party debt collection service, conduct proper vendor due diligence, at least on an annual basis, to validate their process, review their written policies and procedures, and ensure they are reporting summary data to you for validation. Take the time to review or audit their work, ensuring documentation is readily available, accurate, and complete.
If you’re considering a third-party debt collection service, don’t be discouraged. You can still successfully work with vendors that assist or fully take over the Collections process. This simply serves as a reminder to conduct proper due diligence, put oversight mechanisms in place, and obtain references from trusted sources. SCA has relationships in place with third-party collection service providers that may fit the mold for you, so reach out today!
As you evaluate your preparedness in the above areas, call on the experts to safeguard yourself when it comes to reviewing your debt collection practices. SCA remains your trusted resource for assessing your processes and ensuring accuracy and completeness. For more information, please contact our Director, Bill Dolan, at WDolan@scapartnering.com or by phone at (617) 694-2617.
[1] CFPB Shuts Down Commonwealth Financial Systems for Illegal Debt Collection Practices | Consumer Financial Protection Bureau (consumerfinance.gov)
