On May 9, the Federal Trade Commission announced that the debt collection agency Credit Protection Association will pay $72,000 to settle charges that the company violated the Fair Credit Reporting Act ("FCRA"). This case is part of "Operation Collection Protection," a program the FTC describes as "an ongoing federal, state and local crackdown on debt collectors that use illegal practices."
The FTC's Complaint states that CPA did not have adequate policies and procedures in place to handle customer disputes regarding the information it provided to credit reporting agencies. Specifically, the FTC alleged that CPA violated the Furnisher Rule, which requires companies that furnish information to credit reporting agencies to implement written policies regarding the accuracy of the consumer information the company furnishes. The rule requires that when the furnisher receives notice that a consumer is disputing reported information, the furnisher must conduct a reasonable investigation and then notify the consumer of the results of the investigation.
Although CPA did have written policies in place regarding customer disputes, the FTC alleged that the policies were insufficient and, further, that employees were not adequately trained on how to implement the policies in order to comply with the FCRA. In addition, CPA did not have a policy requiring that consumers be notified about the results of an investigation of a dispute. The FTC's Complaint stated that these "failures could lead to CPA reporting inaccurate information to [consumer reporting agencies]," and to consumers not understanding how to properly exercise their rights under the FCRA.
In addition to the monetary penalty, CPA is required to implement policies and procedures that comply with the FCRA.
This action underscores the importance that companies with consumer contact have strong internal compliance policies. Members of Troutman Sanders' Regulatory Compliance and Investigations Group have experience providing compliance advice and assisting companies in creating policies relating to the FCRA and consumer protection.
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