BCFP Enters Consent Order with Bluestem for Delayed Forwarding of Direct Payments on Sold Accounts

On October 4, 2018, the Bureau of Consumer Financial Protection (BCFP or Bureau) filed a consent order with Bluestem Brands, Inc., Bluestem Enterprises, Inc., and Bluestem Sales, Inc. (collectively Bluestem), an online retailer. In addition to agreeing to certain compliance-related measures, Bluestem was ordered to pay a civil penalty of $200,000 to the Bureau.

According to the order, the Bureau alleges that Bluestem “engaged in unfair acts and practices by substantially delaying forwarding post-sale payments made by consumers to Bluestem.” Bluestem sells charged-off accounts to third-party debt buyers. The order mentions that Bluestem does not take affirmative action to notify consumers when their account is sold. After the sale of an account, some consumers would still make payments directly to Bluestem. Bluestem delayed forwarding some of these payments to the debt buyers, which “was likely to subject consumers to misleading debt-collection efforts and inaccurate credit reporting.”

The order states that since 2013, there were 3,500 instances where the payment forwarding delay was over 365 days and 18,000 instances of at least a 31-day delay. According to the order, this was due to “operational errors” that stemmed from a conversion of Bluestem’s accounts receivable system.

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