Government Crackdown on Debt Brokers

How safe is your financial information when it makes its way into the hands of Illinois debt buyers and debt collection agencies? As it turns out, your personal information may not be very safe at all. According to a recent article in the New York Times, a federal court ordered two different consumer debt brokers to alert “more than 70,000 people that they may be at risk for identity or debt fraud after the companies posted financial details and other personal information about them online.” The ruling comes as part of a “multiyear government crackdown on scams that target people in financial distress.”
Debt Brokers Amass a Significant Amount of Personal Information
First thing’s first: what’s a debt broker? According to the Illinois Collection Agency Act, a debt broker is a person or an entity that sells consumer loans or consumer credit accounts that are delinquent or have been charged off to debt buyers or debt-buying companies. In short, a debt broker assists another person or entity in buying debt from a creditor who then attempts to collect that debt from the delinquent consumer.
So what type of information—and how much information—do debt brokers obtain about consumers? It turns out that these companies have a substantial amount of information about debtors, and consumers could be at risk if that information makes its way into the wrong hands. According to Jessica L. Rich, the director of the Federal Trade Commission’s bureau of consumer protection, “more and more of our cases involve fraudsters making use of sensitive consumer data.” And Rich emphasizes that scammers actually “are able to obtain this information quite easily.”
In the recent case, two specific debt brokers were implicated in failing to protect sensitive consumer data. Consumers in all 50 states, including Illinois, are at risk of having their personal and financial information picked up by scammers.
Internet Access to Unencrypted Consumer Information
How would scam artists or other persons with fraudulent intentions obtain this sensitive consumer information? According to the article, the companies implicated in the federal lawsuit—Bayview Solutions and Cornerstone and Company—posted the information on the internet. Thousands of debt portfolios were posted “with unencrypted information” on a website “for debt collectors that anyone could gain access to.”
What specific information was contained in these portfolios? The legal complaint emphasizes that scammers would have had access to “significant details about consumers in addition to the debts supposedly owed.” This information included:
  • Consumers’ first names;
  • Dates of birth;
  • Physical contact information (home addresses, for example) and electronic contact information;
  • Employer’s names and contact information;
  • Bank names where consumers have accounts;
  • Consumers’ bank account numbers;
  • Consumers’ credit card numbers; and
  • Driver’s license numbers.
Federal regulators described the debt brokers’ seemingly nonchalant posting of this information as “reckless, outrageous, and unfair.” As a result of their actions, tens of thousands of consumers are now “at risk for identity theft, financial fraud, and job loss.”
As a consumer, you have certain rights. When a debt collection agency doesn’t abide by state and federal laws surrounding debt collection, those companies can be held liable. Contact an experienced Chicago consumer protection lawyer today to learn more about filing a claim.
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