When residents of Minnesota and Wisconsin look back on summer, it’s often with fond memories of sunny days, sparkling lakes and weekends at cabins up north. When the Consumer Financial Protection Bureau (CFPB) recently looked back with its summer edition of Supervisory Highlights, it was with memories of abusive debt collection efforts.
The CFPB noted that the Fair Credit Reporting Act (FCRA) requires firms that supply information about delinquent accounts to report the date of the delinquency to consumer reporting companies within 90 days. However, the CFPB found multiple cases in which debt collectors failed to obtain the actual dates on which consumers fell behind on payments and deliberately used inaccurate information instead.
The CFPB said collectors used dates “they knew or had reason to believe was an incorrect date.” Rather than obtaining the actual date on which the consumer fell behind, the collectors sometimes used the charge-off date instead.
What’s a charge-off date? Cambridge Credit Counseling describes the term as it’s the day on which “a creditor charges-off an account they are taking an account off of their accounting books that they assume will never get paid.”
It cites as an example credit card accounts that are not on repayment plans must be placed in charge-off when the account is 180 days past due. Credit card accounts on repayment plans must be put in charge-off status when they’re delinquent for 120 days.
The CFPB says the debt collectors in question were contacting consumers about delinquent cable, satellite and telecommunications accounts. They falsely told consumers that the date of delinquency was the date that the consumer’s service was disconnected, even though that date is months after the consumer had first missed a payment.
The CFPB says that one or more of the debt collectors engaging in the abusive collection practice have “ceased operations.”
It should be noted that the misrepresentation of the debt allegedly owed is a violation of the Fair Debt Collection Practices Act (FDCPA).