Regulators from the states of Connecticut, Idaho, Massachusetts, Minnesota and North Dakota (“Participating States”) have entered into a settlement agreement with three affiliated debt collection companies to settle allegations that the companies engaged in collection activities that violated the Fair Debt Collection Practices Act, the FTC Act, and state laws and regulations. The settlement requires the companies to pay $500,000 to be divided equally among the Participating States.
The agreement indicates that the companies were licensed as collection agencies under the laws of the Participating States. It also indicates that the Participating States began a multi-state examination of the companies that was conducted concurrently with a targeted review by the CFPB of one of the companies’ federal student loan debt collection activity. The initial examination review period covered collection activity from February 11, 2013 to February 27, 2015, with consideration also given to activity outside of that period.
In addition to alleging that all of the companies failed to provide access to collection records and submit timely and complete responses to requested information in violation of state statutes and regulations, the agreement alleges that one of the companies engaged in the following unlawful conduct:
- To meet revenue goals, the company’s agents were directed to make calls to telephone numbers that previously had been designated as “do not call” and to mark the accounts with a special identifier to avoid disciplinary action for violations of law and company policy. The agreement alleges that such calls violated various FDCPA provisions, such as those limiting third party calls and calls to a consumer at his or her place of employment. It further alleges that the calls constituted unfair conduct in violation of the Consumer Financial Protection Act’s UDAAP prohibition and also violated specified state statutes and regulations.
- The company failed to credit payments made by check on the day the check was received and instead delayed credit until the check cleared, which typically took four to five days. The agreement alleges that such conduct violated the FDCPA prohibition on collecting amounts that are not expressly authorized by the agreement creating the debt or permitted by law, was an unfair or abusive practice in violation of Section 5 of the FTC Act, was unfair, deceptive, or abusive behavior in violation of the CFPA’s UDAAP prohibition, and violated specified state statutes and regulations.
State regulators do not have authority to directly enforce the FDCPA or Section 5 of the FTC Act. However, many state debt collection statutes (such as the Connecticut statute) require debt collectors to comply with the FDCPA. Under Section 1042 of the CFPA, state regulators are authorized to bring a civil action to enforce the CFPA’s UDAAP prohibition against state-licensed entities.
In addition to making the $500,000 payment, the settlement agreement requires the companies to establish a compliance management system that meets specified standards for oversight, monitoring, training, and audits. It also prohibits the companies from continuing to engage in the alleged unlawful conduct, to reimburse consumers for any interest or fees that resulted from not crediting a payment made by check on the date the check was received, and to comply with specified state requirements.