May 9, 2016 | dan Debt Collector Settles FTC Charges It Violated Fair Credit Reporting Act Defendant Will Pay $72,000, Be Required To Use Proper Procedures 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 charges that it violated the requirements of the Fair Credit Reporting Act (FCRA). The FTC’s complaint alleges that Credit Protection Association (CPA) failed to 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 numerous instances consumers were not informed whether information they disputed had been corrected. “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.” 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 Furnisher Rule’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 complaint also alleges that CPA often relied on its clients – the original debt holders – 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. 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. The Commission vote to authorize the staff to refer the complaint to the U.S. Department of Justice and to approve the proposed stipulated order was 3-0. The DOJ filed the complaint and proposed order on behalf of the Commission in U.S. District Court for the Northern District of Texas. NOTE: The Commission authorizes the filing of a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. Stipulated final orders have the force of law when approved and signed by the District Court judge.