WASHINGTON, D.C. – Today the Consumer Financial Protection Bureau (CFPB) filed a federal complaint against EOS CCA (EOS), a Massachusetts debt collection firm, for reporting and collecting on old cellphone debt that consumers disputed and EOS did not verify. The company also provided inaccurate information to credit reporting companies about the debt and failed to correct reported information that it had determined was inaccurate. The CFPB filed a proposed consent order that, if entered by the court, would require EOS to overhaul its debt collection practices, refund at least $743,000 to consumers, and pay a $1.85 million civil money penalty.
“After buying a portfolio of debt, EOS soon learned of several red flags that raised doubts about the debt’s validity. Even so, EOS still proceeded to collect certain disputed and unverified debts,” said CFPB Director Richard Cordray. “It is unacceptable that consumers were harmed by these practices and that the company supplied inaccurate information to the credit reporting companies, so today we are taking action to stop it.”
EOS is a debt collection company headquartered in Norwell, Mass. that also has a debt-purchasing arm. Like many other debt collectors, EOS collects delinquent or charged-off accounts that were purchased for a fraction of the value of the debt. Although EOS typically pays only pennies on the dollar for the debt, it may attempt to collect the full amount claimed by the original lender. In 2012, EOS paid AT&T $35.4 million for a portfolio of more than three million cellphone accounts with a total face value of $2.3 billion. Many of these debts were old accounts that had been previously sent to multiple collection agencies.
The CFPB’s investigation found that EOS learned of significant problems with the portfolio a few months after acquiring it. Among other things, the portfolio contained fraudulent, already paid, or already settled debts. Despite this, EOS continued to collect and report on the debts, including debts that consumers disputed, without verifying that those debts remained outstanding. In addition, EOS initially reported all the debts to the credit reporting companies as disputed even though it had no basis to believe that all the debts had in fact been disputed by consumers.
These practices violated the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, and the Dodd-Frank Wall Street Reform and Consumer Protection Act.