Company to Pay $101,500 Civil Penalty for Dumping Sensitive Consumer Documents in Publicly-Accessible Dumpsters

A company that operates payday loan and check cashing stores in at least nine states has settled with the government over allegations that it violated federal regulations, the Justice Department announced today.   In April 2010, law enforcement officers retrieved boxes of intact consumer documents, including credit reports, from trash cans and dumpsters near four PLS Financial Services stores in the Chicago area.   The improper disposal of these documents led to an investigation by the Federal Trade Commission (FTC).   

A complaint filed by the Department of Justice on behalf of the FTC, naming PLS Financial Services, PLS Group and The Payday Loan Store of Illinois as defendants, alleged that the companies violated the Federal Trade Commission Act, and the Disposal Rule, the Safeguards Rule and the Privacy Rule by improperly disposing of sensitive financial documents, failing to develop reasonable safeguards to protect sensitive consumer information, failing to provide privacy notices to consumers and misleading consumers about its privacy policies.   

Judge Joan Gottschall of the U.S. District Court for the Northern District of Illinois today entered a stipulated final judgment, which requires the defendants to pay a civil penalty of $101,500 for its violations of the Disposal Rule.   The Disposal Rule requires that any person who possesses consumer information derived from consumer reports for a business purpose must take reasonable measures to protect against unauthorized access or use of that information.   Violations of the Disposal Rule can result in a civil penalty of up to $3,500 per violation.   The stipulated final judgment also includes a permanent injunction prohibiting the defendants from misrepresenting their security and privacy policies and from violating the Disposal, Safeguards and Privacy Rules.   In addition, the proposed order requires the defendants to maintain a comprehensive information security program that meets the standards of the Safeguards Rule, and to obtain third-party biennial assessments of their information security procedures for a twenty-year period.   

“Companies that handle sensitive consumer documents have a duty to keep that information secure and to dispose of it properly,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division.    “Improper disposal of these documents can lead to dire consequences for consumers, including identity theft and other crimes.   The Department of Justice will continue to support the FTC’s efforts to enforce federal regulations that protect consumer financial information.”   

Acting Assistant Attorney General Delery thanked the FTC for referring this matter to the Department. The Consumer Protection Branch of the Justice Department’s Civil Division brought the case on behalf of the United States.