In last week’s “In the News” post, we discussed the actions that are being taken by the Consumer Financial Protection Bureau (CFPB) against National Corrective Group for threatening consumers with criminal prosecution and jail time for writing bounced checks. If passed by the federal district court, the CFPB’s order will require the company to pay $50,000 in civil penalties.
If you’ve given any thought to it, you may be wondering how the CFPB decides on the penalties imposed on collectors who use abusive or deceptive practices. Why aren’t these debt collection companies shut down for tricking or bullying people out of their money?
While the actual fines are decided by federal court judges, the CFPB does suggest the amount they believe to be the appropriate penalty, and they have the power to oversee a company’s operations for as long as they see fit after the fact.
In the case of the National Corrective Group, we can postulate that shutting the company down may have been the punishment had their actions been the trained policies and procedures of the business. It is likely that the penalties requested by the CFPB are scaled to “fit the crime” because a few collectors went rogue out of a desire to make extra money.
However, Mats Jonsson, CEO of National Corrective Group, is named individually in the complaint as a defendant. Jonsson is the senior company executive in charge of the daily operations of its bad check diversion programs and continues to operate Victims Services, Inc. and American Justice Solutions, Inc.
The CFPB is still in its infancy, so investigation practices are relatively new. Still, determining how deep the corruption went remains difficult. How many people within the company were active in these deceitful practices and how many others knew about it? Were the deceptive practices parts of their trained policy? The CFPB uses these and other questions to determine the level of compliance and the appropriate sanctions.