In the News 04/07/2015

The Consumer Financial Protection Bureau (CFPB) recently announced that they will be taking action against a nationwide debt collection operation and it’s CEO for threatening consumers with criminal prosecution and jail time for writing bounced checks. National Corrective Group, a privately-held corporation based in California, is also charged with misleading consumers to believe that they were required to enroll in an expensive financial education program to avoid the criminal charges.

The CFPB’s proposed order is currently being reviewed by the federal district court. The order would end all illegal activity, impose a civil penalty of $50,000 and require new regulations on consumer disclosure and strong supervision of the bounced check program.

For more information, check out the following press:

In the News 03/24/2015

A furniture and electronics retailer based in Virginia will be required to pay more than $2.5 million in restitution and $10,000 in civil penalties for illegal debt collection practices according to the Consumer Financial Protection Bureau.

Freedom Stores, Inc., Freedom Acceptance Corporation and Military Credit Services, LLC has been accused of filing illegal lawsuits, making unauthorized withdraws from consumer accounts and contacting service members’ commanding officers.

Many of the consumers who were in debt with these companies had parents, significant others or third parties that authorized a one-time payment on their behalf. The withdrawals became illegal when the companies kept that payment information in their systems and took funds from those accounts without authorization or notification (sometimes years later).

Between July 2011 and December 213, Freedom Acceptance Corporation and Military Credit Services filed more than 3,500 lawsuits in Norfolk, Virginia against consumers who had not signed their financing contracts in Virginia and did not live there when the suits were filed. Nearly all of the suits filed resulted in default judgment and the companies garnishing the consumers’ wages. Many of the consumers did not even know they had been sued until their bank funds had been depleted.

The company currently has 14 store locations across the country. Freedom Stores has agreed to compensate its customers and forgive more than $2 million in loans. The company is subject to continued monitoring by the CFPB.

To learn more, check out

In the News 02/24/2015

DriveTime Automotive Group, Inc. has recently been accused of debt collector harassment and agreed to an $8 million settlement to reconcile charges of violating the Fair Debt Collection Practices Act (FDCPA). The charges brought against the company after an investigation by the Consumer Financial Protection Bureau (CFPB) alleged that they lacked an adequate written policy for their bill collectors, which led to collector harassment, as well as inaccurate reporting of current balance information on accounts, timings of repossessions and dates of first delinquency.

The report issued stated that DriveTime, which has dealerships across the country, had only two employees assigned to handle up to 22,000 disputes each year. Accusations of calling consumers at work and after receiving cease contact requests were also included in the charges.

Read more here:

In the News 02/17/2015

The Consumer Financial Protection Bureau (CFPB), a government agency originally created with the power to oversee, audit and punish banking and collection agencies, continues to address acts which it believes to be harmful to consumers or internal policies that are not sufficient to protect consumers from unfair, deceptive and abusive acts or practices

The Bureau is currently focusing on information access and student lending in early 2015. It recently issued guidelines restricting disclosure of confidential supervisory information, such as documents prepared by or for the CFPB or federal or state government usage and compliance reports. Under these new regulations, supervised financial institutions cannot disclose confidential supervisory information except in specific circumstances.


Other activity includes their partnership with the U.S. Department of Education to issue a $480 million forgiveness of student loans through Corinthian College, Inc.’s Genesis loan program.

This stems from the Bureau’s ongoing lawsuit against Corinthian College, which suggests that the college used false and deceptive advertising to encourage students to take loans and then subsequently use illegal debt collection tactics in an effort to force students into paying the loans back while they were still in school.

Also on the agenda for 2015, the CFPB is targeting credit card company fee structures and extending its supervisory authority. Read more about recent CFPB activity here:

In the News

Consumer protection

The Consumer Financial Protection Bureau (CFPB) is a government-created agency that was created in 2011 and has since been working to regulate and enforce consumer financial protection laws. This agency has taken on major industries, such as credit card companies, mortgage, real estate settlements, debt collection and now—telecommunication.

The CFPB has recently filed an action against Sprint, which has many asking whether this bureau will now be extending its reach into other types of industries. While previously relevant industries sold “consumer financial products and service,” telecom companies simply charge consumers for services. Read more here:

What are your thoughts? Are the parameters of this action within the intent of the Dodd-Frank Act?

Best Business Practices, Part III

Vendor Management Program


Outsourcing is a helpful, often times necessary expenditure of your time and resources.

More accurately, it can equate to a savings of your time and resources.  Depending on the service provided, outsourcing some of your needs can also lead you to the procuring of services that you would not otherwise have available to your in-house staff.

We refer to all of these outsourced service providers as vendors.

It stands to reason that as you and your employees are bound by the standards of the Fair Debt Collections Practices Act and the Consumer Financial Protection Bureau that any company or service provider working for you and given access to your client’s data would be subject to those same regulations.

So, you must build and maintain a Vendor Management Program.

It should contain the following features:

– Your due diligence checklist for determining your vendors’ ability to comply with federal consumer financial laws

– Your policy to request and review the vendors’ policies, procedures, internal controls and training materials

– Copies of contracts with each Vendor, which should contain provisions for clear, enforceable expectations for compliance, including consequences for violations

– Your policy for on-going monitoring of the vendor for the purpose of determining compliance with federal consumer financial law

– Your policy for the timely addressing if problems identified through the monitoring process, including possible termination of the vendor relationship when necessary

A quality vendor management program can be cumbersome to develop and implement at first. However, once running smoothly, a single in-house employee can keep it operational with relative ease. After that, it becomes clear that the gain is worth the work.

An ounce of prevention is worth a pound of cure.

Drop by next week for Better Business Practices, Part IV on skip trace waterfall procedures.


CFPB— David versus Goliath

I had this friend that had a summer job as a teenager— he and a buddy pressure-washed siding on apartment buildings.

Whenever the supervisor would come around, the duo acted like they didn’t understand how to do the job very well.  The super would get frustrated, grab the washer and show them how it was done – for about ten full minutes!

What luck!  It was an excellent break!

Normally, nobody likes the boss looking over their shoulder.  They might get caught doing something the wrong way.

But what if you figure out how to use the boss to your advantage like my friend did?

The Consumer Financial Protection Bureau (CFPB) is a government created agency with the power to oversee, audit and even punish banking and collection agencies.


If the CFPB finds that acts have been committed which it believes are harmful to consumers or even that the internal policies are not sufficient to protect consumers from unfair, deceptive and abusive acts or practices (commonly called UDAAP), then those institutions will be subject to swift and harsh fines.

If you are new to the industry, the CFPB can appear to be the giant yelling, “FEE FI FO FUM,” while the collection industry collectively scurries around finding places to hide.


Good question. It doesn’t really have to be that way.

Yes, it’s true that the CFPB has the authority to unilaterally decide which practices were UDAAP and what the fines for it would be for committing them.

But it’s also true that you can use the CFPB to your advantage, like the pressure-washing boss.

When the CFPB began auditing, it looked for findings in seven categories or seven different ‘modules’. And if you will forgive the brief praise of government work, the CFPB did a smart job of presenting these modules in a logical manner.

This is one of those times when the “super” is working for you, so use them to your advantage.  CFPB has provided guidelines so that you know your shop should have written, tested materials in each of these following modules:

Module 1:        Your business model and work flow, including vendors

Module 2:        Communications (all communications to consumers)

Module 3:        Information sharing to third parties

Module 4:        Consumer complaints and dispute resolutions

Module 5:        Payment processing

Module 6:        Equal Credit Opportunity Act compliance

Module 7:        Litigation practices and knowing your legal limitations

These guidelines give debt collection attorneys and agencies that lucky break to perform well.

I don’t know about you, but if the person coming in to test me was willing to show me the test ahead of time, I wouldn’t be too intimidated about that.  And perhaps the tester wouldn’t feel like that much of a giant after all.

Now how do we get the CFPD to audit those defense attorneys?!