CFPB

CFPB Fines Debt Collector Security Group $5 Million

The Consumer Financial Protection Bureau fined Security Group, the debt collector, $5 million in the first fine against a company since it hit Wells Fargo with a $1 billion penalty in April.

The Wall Street Journal, citing the Consumer Financial Protection Bureau, reported that the CFPB charged  Security Group with making “improper in-person and telephonic collection attempts” and “physically preventing consumers from leaving their homes and visiting and calling consumers’ places of work.” The CFPB said Security Group’s practices weren’t fair because they could result in financial information being revealed to employers and others.

“Any marginal benefit in the form of more recoveries is outweighed by the substantial injury to consumers,” the CFPB said in a consent order, reported The Wall Street Journal. While Security Group said it disagreed with the CFPB, it agreed to pay the fine so that it can close the matter. Security Finance Corp., a unit of Security Group, donated $2,000 to CFPB acting director Mick Mulvaney during the run-up to the 2016 election, noted the report.

Ever since President Trump appointed Mulvaney to head the consumer watchdog agency, he has slowed down enforcement actions — in a stark contrast to former director Richard Cordray, who had issued many enforcement actions within a year, with 15 in the last six months he was at the helm.

Mulvaney has said he wanted to focus on companies that have a large number of complaints in the CFPB database and that debt collection was one area where he was focusing. At a recent conference of debt collectors, Mulvaney said there were 407,000 complaints against debt collectors since the bureau was created. He also said that half of the debt collectors in the U.S. didn’t sign up to the CFPB’s portal to respond to complaints lodged by consumers.

“That is a red flag to me,” he said. “If you’re not willing to respond to the complaint, that’s a problem. I won’t lie to you.” Mulvaney said at the conference that “we had a debt collector actually go into somebody’s house and refuse to leave until they were paid,” which prompted laughs from the audience, noted The Wall Street Journal.

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