Is Fair Collections and Outsourcing Hurting Your Credit?

If Fair Collections and Outsourcing (FCO) has appeared on your credit report, the debt traces to a rental housing account. The CFPB has specifically described FCO as “the largest debt-collection company in the multi-unit housing industry.” They collect for apartment complexes, student housing, military housing, senior living, and assisted living facilities.

In 2021, FCO settled a CFPB lawsuit for $850,000 for failing to investigate identity theft disputes and misrepresenting that consumers owed debts without a reasonable basis for that claim. This guide covers who FCO is, what that settlement means for you, and how to respond.

Who Is Fair Collections and Outsourcing?

Fair Collections & Outsourcing, Inc. (FCO) is a Maryland-based debt collection holding company operating through FCO, Inc., FCO NE (New England), and FCO Worldwide (a Philippines-based call center subsidiary).

The company was founded in 1996 and grew from a spinoff of Pierce Hamilton & Stern, Inc., a Bethesda debt collection agency. FCO’s owner and CEO is Michael E. Sobota. His brother Stephen Sobota heads Hunter Warfield, a related but separate housing debt collector also created in the same Pierce Hamilton spinoff.

FCO holds an F BBB rating with 112+ complaints and is not BBB-accredited. Multiple consumer attorney sources confirm FCO is not known for filing lawsuits against consumers.

The 2021 CFPB Settlement

In September 2019, the CFPB filed a federal lawsuit against FCO and owner Michael Sobota. FCO settled in August 2021 for $850,000.

The CFPB found two violations. First, FCO gave employees almost no guidance for investigating credit bureau disputes and never instructed them to examine the substance of a dispute.

Second, when identity theft victims submitted police reports, employees were told to verify the account as accurate as long as the name and Social Security number matched. A fraudulently opened account tied to a stolen identity would pass that test. FCO continued reporting those accounts even after receiving documentation of the theft.

If FCO is reporting an account you have disputed as identity theft, file a complaint at consumerfinance.gov and reference the 2021 FCO consent order by name.

Housing Debt and What FCO Collects

FCO’s client base is 100% housing-related. Their confirmed collection categories include:

• Multi-unit residential apartments: Unpaid rent, early lease termination fees, damage charges, and move-out fees.
• Student housing: On-campus and off-campus student housing balances.
• Military housing: Privatized on-base housing balances from servicemember accounts.
• Senior and assisted living facilities: Resident account balances.
• Commercial property: Business tenant account balances.

If you have never rented an apartment, lived in student or military housing, or resided in a senior living facility, and FCO appears on your credit report, investigate immediately. Given FCO’s documented identity theft investigation failures, a fraudulent account from a housing lease signed in your name is a real possibility.

The Pay-for-Delete Problem

The single most common documented consumer complaint against FCO is pay-for-delete not being honored. Consumers report agreeing to pay a balance with a written or verbal understanding that the account would be removed from their credit report, making the payment, and then finding the account remained. FCO’s practices around pay-for-delete are not consistent, and any such agreement must be in explicit written form before payment is made.

Not Known for Suing Consumers

Multiple consumer attorney sources confirm that FCO is not known for filing lawsuits against consumers. The most common explanation is that FCO does not always own the debt they collect, and pursuing lawsuits nationally would require licensed attorneys in every state. If FCO has threatened you with a lawsuit or wage garnishment, document those threats and file a CFPB complaint.

What FCO Cannot Do Under Federal Law

The FDCPA and FCRA apply to Fair Collections and Outsourcing. Under these laws, they cannot:

• Verify identity theft disputes by SSN/name match alone without substantive investigation: The centerpiece of the 2021 CFPB settlement.
• Continue reporting accounts after receiving identity theft police reports: A specific CFPB finding.
• Misrepresent that consumers owe debts without reasonable basis: A second CFPB finding.
• Fail to honor written pay-for-delete agreements: A documented complaint pattern.
• Contact third parties about your debt: Multiple documented complaints.
• Call outside permitted hours: Contact is only allowed between 8 a.m. and 9 p.m. in your time zone.

File complaints at consumerfinance.gov. Maryland residents can also file with the Maryland Attorney General’s Consumer Protection Division.

Verify the Debt Before Paying Anything

Send a written debt validation request by certified mail within 30 days of first contact. Ask for the original property management company or landlord, the address of the leased property, the lease term dates, the specific charges making up the balance, and the date of original delinquency.

For housing debt, also confirm you actually had a tenancy at the property address FCO identifies. Identity fraud through fraudulently signed lease applications is a documented risk in this industry.

How to Check Your Credit Report for FCO Errors

Pull your credit reports from all three bureaus at AnnualCreditReport.com. Is the balance correct? Is the property address one you actually occupied? Does the account appear more than once? Any inaccuracy, including an address you never lived at, is grounds for a dispute with each credit bureau.

How Long Can FCO Legally Pursue the Debt?

Maryland has a 3-year statute of limitations on most consumer debts, one of the shorter limits in the country. If you no longer live in Maryland, the relevant state is typically where you currently reside.

Your Options for Resolving an FCO Account

Once you have verified the debt, consider your options:

• Go to the original property manager: Contact the apartment complex, student housing office, or senior living facility directly. Resolving the account at the original creditor level can sometimes produce better outcomes.
• Get pay-for-delete in writing before paying: The documented consumer complaint pattern makes written confirmation essential before sending any payment.
• Dispute identity theft accounts: Given FCO’s documented failure to properly investigate these disputes, file simultaneously with the credit bureaus, the CFPB, and reference the 2021 consent order.
• Dispute if inaccurate: If the property address is unfamiliar, the balance is wrong, or FCO did not honor a written agreement, dispute with each credit bureau.

How to Contact Fair Collections and Outsourcing

Handle all communication in writing:

• Address: Fair Collections & Outsourcing, Inc., 12304 Baltimore Ave, Suite E, Beltsville, MD 20705
• Phone: (877) 324-7265

Bottom Line

FCO is the largest housing debt collector in the country and has a 2021 CFPB settlement for failing to properly investigate identity theft disputes. Maryland’s 3-year statute of limitations is one of the shortest in the country.

Get any pay-for-delete agreement in writing before paying. If FCO is reporting a housing debt from an address you never occupied, file an identity theft dispute with the credit bureaus, the CFPB, and reference the 2021 consent order explicitly.