Feds hit debt collector with $1.5 million fine
|May 14, 2004|
Agreement settles allegations of credit reporting act violations
Pennsylvania-based NCO Group, one of the nation's largest debt-collection firms, has agreed to pay $1.5 million to settle Federal Trade Commission charges that it violated the Fair Credit Reporting Act by reporting inaccurate information about consumer accounts to credit bureaus. The amount is the largest civil penalty ever obtained in a FCRA case, according to the FTC, which announced the agreement today.
NCO companies violated a section of the fair credit reporting act that requires entities to report the actual month and year when an account first became delinquent when they to credit bureaus that a delinquent consumer account has been placed for collection or written off, according to the FTC's complaint. Credit bureaus use that date to measure the maximum seven-year reporting period the FCRA mandates. The rule helps ensure that debts that are beyond this seven-year reporting period don't appear on a consumer's credit report. Violations of the rule are subject to civil penalties of $2,500 per violation.
The FTC charged that NCO reported accounts using later-than-actual delinquency dates, an action that could cause consumers' credit scores to be lowered and possibly result in their rejection for credit or having to pay a higher interest rate.
The proposed consent decree orders NCO to pay civil penalties of $1.5 million and permanently bars the companies from reporting later-than-actual delinquency dates to credit bureaus. The agreement also requires NCO to implement a program to monitor all complaints received to ensure that reporting errors are corrected quickly and contains standard recordkeeping and other requirements to assist the FTC in monitoring compliance.
The U.S. Justice Department filed this matter May 12 in the U.S. District Court for the Eastern District of Pennsylvania at the FTC's request. The complaint is not a finding or ruling that the company has violated the law and the stipulated final order is for settlement purposes only and does not constitute an admission of guilt, the FTC stated.
Copyright: Inman News Features