WASHINGTON—The Bureau of Consumer Financial Protection has filed a consent order against Security Group Inc. and its subsidiaries over its debt-collection and credit-lending practices.
"Security Group is a payday lender and, by the looks of it, the exact kind of payday lender that makes the PAL program and other responsible short-term, small-dollar lending programs offered by credit unions such a critical alternative for members," said NAFCU Senior Regulatory Compliance Counsel Elizabeth Young LaBerge.
Among the violations and failures of the company as noted by the Bureau, including:
- UDAAP (unfair, deceptive or abusive acts or practices): "Security Group conducted 12 million in-person visits to borrowers' homes, their neighbors and their places of employment in efforts to collect on these loans," LaBerge said.
- FCRA (Fair Credit Reporting Act): Security Group entities regularly provided inaccurate and incomplete information about consumers to credit reporting agencies.
As a result of the company's failures, Security Group and its subsidiaries are barred from certain collection practices, must correct consumer information given to credit reporting agencies and pay a $5 million civil money penalty.
More specifically, Security Group must prevent its collectors from making in-person visits to consumers and limit its telephone outreach once a consumer has asked them to stop.
LaBerge pointed out that some of these requirements are similar to those found in the Fair Debt Collections Practices Act (FDCPA). "In the past, NCUA has recommended that credit unions avoid the practices prohibited under the FDCPA, including engaging in harassment or abuse, making false or misleading representations or engaging in unfair practices, even where the law does not apply to the credit union," she said.