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Federal watchdog sues Maryland debt collection company

COLLEGE PARK — A federal watchdog agency sued a debt collection company and its owner Wednesday, accusing them of collecting debts without a “reasonable basis” to assert that consumers owed the money.

The Consumer Financial Protection Bureau filed its federal lawsuit against Beltsville, Maryland-based Fair Collections & Outsourcing Inc. and other related companies owned by Michael Sobota, of Ormond Beach, Florida.

The suit alleges Sobota’s company has failed to ensure the “accuracy and integrity” of information it provides to consumer-reporting agencies, including Equifax, Experian and TransUnion. It also accuses the company of failing to conduct reasonable investigations of consumer disputes.

Sobota said in a statement that a bureau audit of his company didn’t turn up “a single instance of consumer harm.”

“We will not be bullied into agreeing that we violated regulations when we clearly did not,” said Sobota, also the company’s CEO and president.

Sobota said the bureau, before suing, wanted his company to pay a civil penalty that is more than twice its net worth.

“Instead, we will vigorously defend against CFPB’s false assertions about FCO’s collection practices,” he said.

The company collects debts on behalf of large apartment complexes, including student and military housing, and assisted-living facilities. The suit says the company currently furnishes information to consumer-reporting agencies on approximately 500,000 debt collection accounts.

Company employees have resolved consumer disputes “at a fast pace that generally allowed for only a limited review,” the suit says.

“For example, from August 2017 to November 2017, FCO employees resolved indirect disputes at an average rate of about 17 disputes per hour, assuming that they did nothing but resolve disputes in an 8-hour day,” it adds.

The lawsuit claims Sobota’s company knew that its employees weren’t consistently reviewing supporting documentation that accompanied certain consumer disputes.

“Despite this knowledge, FCO made no changes to its policies and procedures regarding investigations of indirect disputes for at least seven years. Instead, FCO continued to assign its employees a high workload with little supervision or guidance,” the suit says.

A bureau database includes more than 1,000 public consumer complaints against Fair Collections & Outsourcing. Court records show dozens of lawsuits have been filed against the company over the past decade in federal district courts across the U.S.

The bureau’s case is assigned to U.S. District Court Judge George Jarrod Hazel in Greenbelt, Maryland.

Sobota’s statement says his company has more than 200 employees. He described the lawsuit as “unfounded” and said employees and customers will “get a glimpse into how the Bureau unfairly and unlawfully bullies good companies like ours.”


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