A consent order citing substantial delays in an online retailer’s forwarding of customers’ payments on debts already sold to debt buyers requires process improvements and imposes a civil money penalty of $200,000, the federal consumer financial protection agency said Thursday.
The order resolves claims made by the Bureau of Consumer Financial Protection (BCFP, formerly known as CFPB) against Bluestem Brands, Inc., Bluestem Enterprises, Inc., and Bluestem Sales, Inc., a family of companies that are headquartered in Eden Prairie, Minn., and do business throughout the United States under the names Fingerhut and Gettington.com
In the order, filed Thursday, the bureau found that the Bluestem companies engaged in unfair acts and practices by substantially delaying the transfer of payments that customers had made to the Bluestem companies on charged-off accounts to the third-party debt buyers who had purchased those accounts.
“The Bureau found that between 2013 and 2016, Bluestem delayed forwarding payments for more than 31 days in 18,000 instances; in 3,500 of those instances, Bluestem delayed forwarding payments for more than a year,” the BCFP said in its release Thursday. “These delays likely subjected customers to misleading collection activity, including collection activity on accounts that they had completely paid off.”
The consent order says most of the delays noted resulted from a conversion of Bluestem’s accounts receivable system in March 2014 “or other technical system issues that resulted in direct pays made on certain debt-sale files not being timely forwarded to debt buyers.” (“Direct pays” refers to payments made on sold debts.)
In addition to paying the CMP, the Bluestem companies are required under the order to improve their processes to timely identify and forward customer payments on accounts that they have sold to third-party debt buyers; improve processes to prevent consumers from making payments by phone or on the companies’ websites on sold accounts; and notify customers who do make payments to the Bluestem companies (for example, by mailed check) on sold accounts that their accounts have been sold.