Blog Enforcement Watch June 23, 2020

CFPB Settles with Three Companies Over Alleged UDAAP and FCRA Violations

On June 23, 2020, the Consumer Financial Protection Bureau (CFPB) announced that it reached a settlement with three companies that issued contracts for deeds with consumers.  According to the CFPB, between 2010 and 2016, these companies allegedly had a business plan of acquiring foreclosed properties in bulk and reselling them to consumers through seller financing in the form of contracts for deed.

The CFPB claimed that defendants engaged in deceptive acts and practices in violation of the Consumer Financial Protect Act (CFPA), 12 U.S.C. § 5536(a)(1)(B), and violated the Fair Credit Reporting Act (FCRA) and its implementing Regulation V, 12 C.F.R. § 1022.42(a), 1022.43, by misrepresenting to consumers who complained about errors on their consumer reports that they would need to file a dispute with the consumer-reporting agency prior to obtaining any relief.  According to the CFPB, these alleged actions were contrary to FCRA, which requires that furnishers of credit information investigate written disputes and contact the consumer-reporting agency to resolve any errors. The CFPB further alleged that defendants’ conduct was deceptive under the CFPA because it would likely affect a consumer’s conduct regarding how to go about getting consumer-reporting errors resolved.  Lastly, defendants were alleged to have ​violated Regulation V by failing to establish reasonable written policies and procedures regarding the accuracy and integrity of consumer information furnished to consumer reporting agencies and failing to provide adequate staff training.

The Consent Order requires defendants collectively pay a civil money penalty of $35,000. Defendants must also establish and implement reasonable credit-reporting policies and develop and adhere to a compliance plan.