CFPB fines installment lender for debt collection practices
The Consumer Financial Protection Bureau on Wednesday ordered Security Group Inc., a high-cost installment lender in Spartanburg, S.C., to pay $5 million for illegal tactics in trying to collect debts, including telling consumers they could face jail time, shoving them or physically blocking a consumer from leaving private property.
Security Finance, with 900 stores nationwide, made 12 million in-person visits to more than 1.3 million consumers, trying to collect debts during a six-year period from 2011 to 2016.
The company's practices included "physically preventing consumers from leaving their homes and visiting and calling consumers’ places of work while knowing that those contacts could endanger the consumers’ employment," the CFPB said in a press release.
Security Finance, which has subsidiaries in 20 states and uses 21 different operating names, "disclosed or risked disclosing consumers' delinquency to third parties, disrupted consumers' workplaces and jeopardized their employment, and humiliated and harassed consumers," according to the CFPB's 31-page consent order.
The company "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," the order stated.
In a statement published in The Washington Post, Susan Bridges, the company's CEO, denied any wrongdoing.
“We are agreeing to this settlement to close the matter and move forward in serving our customers in the fast, friendly, socially responsible manner that has been our tradition since my father founded Security in 1955,” Bridges said.
The fine is only the second consent order that the CFPB has issued in the past six months, since acting CFPB Director Mick Mulvaney, a former congressman from South Carolina, took the reins of the agency in November.
The CFPB in April fined Wells Fargo $500 million for auto lending and mortgage abuses; the Wells order was a holdover from former CFPB Director Richard Cordray's tenure.
The consent order announced Wednesday alleged that Security Finance "operated as a common enterprise while engaging in unlawful conduct, including unfair or deceptive acts or practices and other violations of law."
The company's practices were likely to cause consumers "substantial injury, including humiliation, inconvenience, and reputational damage ranging from unwanted attention to disclosure of their delinquent debt to disciplinary action and other negative employment consequences," the order stated.
Security Finance did not have any written policies or procedures on credit reporting until 2015, the CFPB found. It received as many as 18,000 credit reporting disputes a month, either directly from consumers or indirectly from the credit reporting agencies, the bureau found.
Under the terms of the consent order, Security Group and its subsidiaries are barred from certain collection practices, and must correct inaccurate information about consumers that it furnished to credit reporting agencies, and pay a $5 million civil money penalty.