The Bureau of Consumer Financial Protection has announced a $5 million settlement with Security Group Inc., and its subsidiaries, Security Finance Corp. and Professional Financial Services Corp., after the payday lender was accused of engaging in unfair, deceptive, abusive acts or practices related to how it collected on those loans.
The UDAAP violations were largely a result of in-person collection attempts made by the defendants in an attempt to get individuals to make payment on their debts, according to the consent order. Between 2011 and 2016, the defendants allegedly made 12 million in-person collection attempts on 1.3 million accounts, according to the consent order. Customers were not told in advance that collection attempts would be made in person, and in doing so, the defendants risked disclosing the unpaid debts to third parties.
Among the activities highlighted by the BCFP that the defendants allegedly engaged in were:
- discussed debts with consumers and took payments from consumers where third parties could see or overhear, such as on a doorstep within earshot of neighbors, on a speakerphone in public, in the middle of a grocery store, through drive-thru windows at fast food restaurants, in line at a big-box retailer, and in other public locations
- handed field cards to third parties, including consumers’ young children, for delivery to consumers
- threatened consumers with jail, shoved them, or physically blocked a consumer from leaving private property;
- visited consumers’ places of employment even when Respondents knew or should have known that the consumers were not allowed to have personal visitors there;
- visited consumers’ places of employment even when the consumers or the consumers’ employers or co-workers had informed Respondents that the consumers could not be contacted at work or that future visits would endanger the consumers’ employment;
- visited consumers’ homes or places of employment multiple times, and without permission from the consumers, in a manner that was likely to reveal that they were collecting a debt, including by visiting more than 10 times in a month;
- visited the homes of consumers’ neighbors and left field cards with their neighbors;
- told third parties, while asking about the consumer, that they were from “Security Finance”;
- directly informed third parties during field visits of consumers’ delinquency
The defendants were also accused of making improper phone calls to individuals, including calls to them while they were at work and attempting to make calls after consent had been revoked. The defendants also called the credit references, landlords, supervisors, family members and suspected family members of the individuals and disclosed or risked disclosing the existence of a debt.
The defendants were also accused of violating the Fair Credit Report Act for not implementing proper policies and procedures related to credit reporting, investigating disputes, or furnishing the first date of delinquency.
This is the first consent order with a company from the ARM industry since Mick Mulvaney was named acting director of the agency last November. This settlement is just the second civil action taken by the BCFP under Mulvaney, following a $1 billion fine that was levied against Wells Fargo in April.