The Consumer Financial Protection Bureau filed a federal complaint against
EOS for reporting and collecting on disputed and unverified consumer cellphone
debt. EOS is a Massachusetts debt collection firm that has a wholly owned
subsidiary, US Asset Management, which collects delinquent or charged-off
accounts. The complaint states that EOS regularly collected defaulted
consumer debt related to a consumer-financial product or service, including
telecommunications debt that was owed to companies that regularly extend
credit by providing cell-phone service without requiring immediate payment.
It is alleged that the company provided inaccurate information to credit
reporting companies about the debt and failed to correct inaccurate information.
The proposed consent order filed by the CFPB would require EOS to refund
approximately $743,000 to consumers and pay $1.85 million in civil penalties.
EOS purchased the debt for a low cost, usually amounting to a fraction
of the amount of the value of the debt, but attempted to collect the full
amount claimed by the original lender. According to the complaint, in
August 2012 USAM entered into an agreement with AT&T to purchase a
portfolio of over three million defaulted accounts with a total face value
of $2.3 billion. These debts were purchased for $35.4 million. The documentation
received from AT&T did not provide sufficient verification the debts
purchased. In January 2013, a senior EOS manager warned that this portfolio
likely contained a significant number of problematic debts. However, EOS
continued to report and collect on the portfolio accounts.
The CFPB’s investigation revealed that EOS continued to collect and
report on debts without verifying that these debt remained outstanding.
Many debts contained within EOS’s portfolio were fraudulent, already
paid, already settled, or so old that they could no longer be legally
collected. Additionally, EOS reported every account in this portfolio
twice to consumer-reporting agencies, once in August 2012 and again in
October 2012. However, EOS has no reasonable cause to believe that all
of these accounts had been disputed by consumers. Likewise, it had already
been determined that the information was not complete and accurate.
The CFPB’s consent order would require EOS to:
- Refund full refunds of payments made on debts that were disputed but not
verified by EOS. The refunds are likely to exceed $743,000.
- Stop collecting and reporting on disputed AT&T debt. If EOS is not
able to substantiate debt that is disputed by a consumer, EOS would be
required to contact the credit reporting companies and ask that the information
be removed from the consumer’s file.
- Ensure accuracy when providing information to credit reporting companies.
- Stop reselling debt and EOS would be prohibited from reselling debts for
a period of five years. This would protect consumers from the potential
harm of continued sale of these inaccurate debts.
- Pay approximately $1.85 million to the CFPB’s Civil Penalty Fund.