By Katalina M. Bianco, J.D.
The Federal Trade Commission has reached a settlement with Credit Protection Association (CPA), a Texas-based debt collection agency, on charges that the agency violated the Fair Credit Reporting Act by mishandling consumer disputes. CPA will pay $72,000 in civil penalties to settle the charges. The case is part of Operation Collection Protection, an ongoing federal, state, and local crackdown on debt collectors that use illegal practices.
“When consumers dispute potentially incorrect information in their credit reports, companies must not only investigate those disputes, but also let consumers know whether the information has been corrected. Otherwise, consumers may be unaware of additional steps they may need to take under the FCRA, including filing dispute statements directly with credit reporting agencies,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection.
In its complaint, the FTC charges that CPA did not follow the requirements of the FCRA’s Furnisher Rule by not having adequate policies and procedures in place to handle consumer disputes regarding information the company provided to credit reporting agencies. The FTC also alleges that CPA did not have a policy requiring notice to consumers of the outcomes of investigations about disputed information and that in many cases consumers were not informed whether information they disputed had been corrected.
The FTC alleges that while CPA had written policies on consumer disputes, the agency did not adequately train employees on the policies. Additionally, the policies did not address the requirements of the Furnisher Rule. The complaint further charges that CPA often relied on its clients—the original debt holders—to investigate credit reporting disputes, but used inconsistent processes for transmitting consumers’ dispute information to its clients. The agency also lacked any “meaningful way” to audit how it handled consumer disputes, said the FTC.
Stipulated final order. Under the stipulated final order, CPA, in addition to paying $72,000 in penalties, will be required to put in place policies and procedures that comply with the requirements of the FCRA and the Furnisher Rule. The company also will be required to follow the rule’s requirements related to conducting dispute investigations and informing consumers of their outcome.
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