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Auto Lenders Be Warned: Feds Fine Texas Bill Collector $3.2 Million : News

The Consumer Financial Protection Bureau and the Federal Trade Commission today levied a $3.2 million penalty against Expert Global Solutions in Plano, Texas, for allegedly harassing U.S. consumers with debt-collection calls, in violation of the Fair Debt Collection Practices Act.

The fine is the latest warning for auto lenders and other groups that U.S. regulators are increasingly scrutinizing providers and their suppliers in the consumer finance sector. In some cases, the government will hold lenders responsible for their suppliers' actions.

The FTC, in levying the fines against Expert Global Solutions, cited the company for repeatedly calling consumers at work, even after collectors were told that the employer doesn't allow such calls, the agency said.

At a field hearing today in Portland, Maine, CFPB Director Richard Cordray is expected to issue a formal bulletin warning debt-collection agencies that "all companies under Bureau jurisdiction will be held accountable for unlawful conduct in collecting a consumer's debts."

"The bulletins make clear that it doesn't matter who is collecting the debt -- unfair, deceptive, or abusive practices are illegal," Cordray is expected to tell suppliers, according to prepared remarks released ahead of time.

It's the latest move by the bureau, created by the Obama administration, to enhance federal laws to protect consumers.

The CFPB ordered U.S. Bank and Dealers' Financial Services on June 27 to refund $6.5 million to military service members.

The CFPB said the companies failed to properly disclose all the fees charged to participants in their Military Installment Loans and Educational Services auto loan program, and that they misrepresented the true cost and coverage of add-on products financed along with the auto loans.

According to his prepared remarks to be delivered today in Maine, Cordray will also announce that the CFPB will start compiling consumer complaints about debt collection.

Those would be added to the CFPB's database of consumer complaints. Those complaints could include complaints related to auto loans, the CFPB said.

Pat Morris, CEO of the Association of Credit and Collection Professionals International, a trade group that includes some collectors who work for auto lenders, is expected to participate in a panel discussion at the CFPB field hearing today.

ACA International does not include auto repossession agencies, which belong to a different trade group, a spokesman said.

Morris, in prepared remarks released ahead of time, said his group supports the CFPB's complaint resolution process as long as it is understood that just because a consumer has complained doesn't mean a collection agent has broken the law or done anything wrong.

"The CFPB's own definition of a complaint," he said, "is simply that the consumer is dissatisfied with the service, product or response they have received from a company."

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