CFPB settles with group accused of delaying consumers' debt payments
WASHINGTON — The Consumer Financial Protection Bureau has settled with the Minnesota-based parent company of several e-commerce brands over allegations that the group unfairly delayed payment transfers to third-party debt buyers.
The CFPB settlement will require remedial steps by Bluestem Brands and two affiliated companies, all based in Eden Prairie, Minn.
The agency alleges that between 2013 and 2016, some customers made payments to the e-commerce group even though their accounts had already been sold to third-party debt buyers. As a result, the CFPB said, in 18,000 instances the payments were delayed for more than 31 days. Customers received notices that they had remaining debt even though they had paid it off.
The agency said the payment delays violated legal prohibitions against unfair acts and practices that cause consumers avoidable injury, the agency said.
“These delays likely subjected customers to misleading collection activity, including collection activity on accounts that they had completely paid off,” the CFPB said in a press release.
The agency and Bluestem filed an administrative consent order Thursday that will require Bluestem companies to improve their processes to ensure timely customer payments on accounts that have been sold to third-party debt buyers.
Under the order, Bluestem must also prevent consumers from making phone or online payments on accounts already sold to debt buyers. The Bluestem companies will also pay a civil money penalty of $200,000.
In a press release, Lisa Gavales, the e-commerce group's interim CEO, said, "We are satisfied with the outcome of the matter."
Gavales said the company cooperated with the agency's investigation. "As part of the regular operation of our compliance management program, we self-identified the facts underlying the direct pay issues and began our own remediation of those issues," she said. "In fact, the Company has already implemented most of the injunctive provisions of the settlement and we do not anticipate any significant impact on our operations."