On February 23, the Consumer Financial Protection Bureau (CFPB) announced that it had entered into a consent order with a national bank, resolving allegations that the bank inaccurately reported interest rate information on credit card debts sold to debt purchasers, failed to remit payments made by consumers to debt purchasers, and failed to timely transmit such payments. The consent order alleged that, between 2010 and 2013, the bank provided inflated interest rate information to debt purchasers for nearly 130,000 credit card accounts, resulting in inflated payments of $4.89 million. This conduct, the CFPB alleged, violated the Consumer Financial Protection Act (CFPA), 12 U.S.C. § 5536(a)(3), because the bank provided substantial assistance to covered persons engaged in deceptive acts or practices.
The consent order further alleged that, during this same time period, the bank’s delay in forwarding nearly 14,000 payments to debt purchasers, or in some cases its complete failure to do so, resulted in consumers paying an additional $1 million on these accounts. The CFPB alleged that this conduct constituted an unfair act or practice in violation of the CFPA, 12 U.S.C. §§ 5531, 5536.
The consent order requires the bank to provide $4.89 million in redress to 2,100 affected consumers, pay a $3 million civil money penalty, and provide supporting documentation to debt purchasers. The consent order further prohibits the bank from selling debt to third parties if it cannot provide documentation supporting the amount and existence of the debt.
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