Texas-Based Debt Collection Company will Pay Fines for Violating Federal Law

The company failed to have adequate policies and procedures in place to handle customer disputes

Texas-Based Debt Collection Company will Pay Fines for Violating Federal Law
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May 11, 2016

A Texas-based debt collection agency will pay $72,000 in civil penalties and be required to adopt new procedures to settle Federal Trade Commission (FTC) charges that it violated the requirements of the Fair Credit Reporting Act (FCRA).

The FTC's complaint alleges that Credit Protection Association did not have adequate policies and procedures in place to handle consumer disputes regarding information the company provided to credit reporting agencies.

CPA also did not have a policy requiring notice to consumers of the outcomes of investigations about disputed information and that in numerous instances consumers were not informed whether information they disputed had been corrected.

In its complaint, the FTC alleges that while CPA did have written policies regarding how disputes were handled, employees were not adequately trained on those policies, and the policies themselves failed to address the law's requirements. The complaint notes that in many cases CPA failed to keep copies of documentation from consumers that disputed the information CPA had provided to reporting agencies.

The FTC's complaint also alleges that CPA often relied on its clients to investigate credit reporting disputes, but its processes for transmitting consumers' dispute information to its clients were inconsistent. The complaint also alleges that the company had no meaningful way to audit or analyze how it handled consumer disputes.

"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. "Companies that fail to live up to these obligations can expect to hear from the FTC."

Under the terms of the settlement, CPA will be required to pay $72,000 in civil penalties, and will also be required to put in place policies and procedures that comply with the requirements of the FCRA and the Furnisher Rule. The company will also be required to follow the rule's requirements related to conducting dispute investigations and informing consumers of their outcome.

The case is part of Operation Collection Protection, an ongoing federal, state and local crackdown on debt collectors that use illegal practices.