Trump-Controlled CFPB Issues First Fine Since Wells Fargo
June 13 2018 - 5:20PM
Dow Jones News
By Lalita Clozel
WASHINGTON -- The Consumer Financial Protection Bureau on
Wednesday fined a debt collector $5 million, the first fine levied
by the bureau since the record $1 billion penalty imposed against
Wells Fargo & Co. in April.
The CFPB said South Carolina-based Security Group Inc. made
"improper in-person and telephonic collection attempts" and had
been "physically preventing consumers from leaving their homes and
visiting and calling consumers' places of work."
The regulator has slowed the pace of enforcement actions since
Mick Mulvaney, who also serves as the White House budget chief,
took over as acting head in November. Under former chief Richard
Cordray, an Obama appointee, the CFPB issued dozens of enforcement
actions annually, including 15 in the last six months of his
tenure.
The bureau argued the practices were unfair because they placed
debtors at risk of having their personal financial information
revealed to third parties, including their employers. "Any marginal
benefit in the form of more recoveries is outweighed by the
substantial injury to consumers," the CFPB said in a consent
order.
Security Group disagreed with the findings. The company said it
"strongly disputes any wrongdoing" but agreed to pay the fine "to
close the matter and move forward in serving our customers."
The company's wholly owned subsidiary Security Finance Corp. of
Spartanburg donated $2,000 to Mr. Mulvaney, a former House
Republican from South Carolina, during the 2016 election cycle,
according to OpenSecrets.org.
Mr. Mulvaney has said he wants to focus the bureau's attention
on companies that are disproportionately represented in its
consumer complaint database. He has already indicated that debt
collectors were in his line of sight.
"I have 407,000 complaints against your industry since the
bureau came into existence," he told an audience of debt collectors
at a Washington conference in May. "Y'all account for almost 30% of
them by yourself," he told members of the Association of Credit and
Collection Professionals.
Mr. Mulvaney has threatened to shield the database, which he
called the " Yelp of financial services," from public view.
The acting CFPB chief said that about half of the country's debt
collectors didn't sign up to the portal to respond to complaints on
it. "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."
At the conference, Mr. Mulvaney said debt collectors were
approaching consumers in sensitive circumstances. "I used to do a
very small debt collection practice back in the 1990s, so I'm
familiar with this," he said.
He also made an apparent reference to the Security Group case.
"We had a debt collector actually go into somebody's house and
refuse to leave until they were paid," he said, prompting laughs
from the audience.
Mr. Mulvaney has said he plans to apply a proportional approach
to determine which industries and companies were the worst
offenders of consumer protection laws.
He suggested he might drop a case recommended by his staff
against an unnamed company that had fielded thousands of consumer
complaints.
"It turned out to be 6,000 out of several million, which if you
do the math is a really, really small sample size," Mr. Mulvaney
told reporters on Tuesday. "That did color and inform my decision
on how to handle that case."
Write to Lalita Clozel at lalita.clozel.@wsj.com
(END) Dow Jones Newswires
June 13, 2018 17:05 ET (21:05 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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