CFPB Proposes Settlement With Md.-Based Debt Collection Agency

The Consumer Financial Protection Bureau (CFPB) filed a proposed settlement Monday to resolve a lawsuit against a debt collection enterprise and its owner.

The CFPB alleges that Fair Collections & Outsourcing (FCO) violated federal law by failing to establish or implement reasonable written policies and procedures regarding the accuracy and integrity of the information it furnished to credit reporting agencies. The agency said FCO also failed to conduct reasonable investigations of indirect consumer disputes, resulting in inaccurate information remaining on consumers’ credit reports.

The CFPB also alleges that FCO and its owner, Michael Sobota, violated federal law when FCO represented that consumers owed certain debts when, in fact, FCO did not have a reasonable basis to assert that the consumers owed those debts.

If entered by the court, the settlement would require FCO and Sobota to put in place reasonable policies and procedures to prevent future violations, and to pay a $850,000 civil penalty.

“As we recover from the economic devastation caused by COVID-19, credit reports play a huge role in consumers’ financial lives,” said CFPB Acting Director Dave Uejio. “Inaccurate information, such as information related to tenant debt, can be devastating for someone who’s applying for a loan, seeking a new place to live, or trying to get a new job.

Uejio added that CFPB “will not tolerate companies that put inaccurate data on consumers’ credit reports or fail to investigate consumers’ disputes.”

FCO, which collectively comprises FCO Holding Inc. and its subsidiaries — Fair Collections & Outsourcing Inc., Fair Collections & Outsourcing of New England Inc., and FCO Worldwide Inc. — is a non-bank debt collector based in Maryland. The proposed settlement seeks to resolve the CFPB’s pending lawsuit against FCO and Sobota, filed in federal district court in Maryland in September 2019.

For more on the proposed settlement, click here.