The Consumer Financial Protection Bureau (CFPB) filed a settlement to resolve a lawsuit against a debt collection company and its owner.
In the suit, the CFPB alleges that Fair Collections & Outsourcing (FCO) violated federal law by failing to establish reasonable written policies regarding the integrity of the information it furnished to credit reporting agencies. Further, the CFPB alleges that the Maryland-based company failed to conduct reasonable investigations of indirect consumer disputes, resulting in inaccurate information remaining on consumers’ credit reports.
In addition, the CFPB says the company’s owner, Michael Sobota, violated federal law when FCO said consumers owed certain debts when, in fact, FCO did not have a reasonable basis to assert that the consumers owed those debts.
The proposed settlement would require FCO and Sobota to put in place reasonable policies and procedures to prevent future violations and pay an $850,000 civil money 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,” CFPB Acting Director Dave Uejio said. “We will not tolerate companies that put inaccurate data on consumers’ credit reports or fail to investigate consumers’ disputes.”
The proposed settlement seeks to resolve the CFPB’s pending lawsuit against FCO and Sobota, which was filed in federal district court in Maryland in September 2019.