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Debt collectors hit with big fines

By Jeanine Skowronski · Bankrate.com
Wednesday, September 9, 2015
Posted: 5 pm ET

credit-card-blog-cfpb-fines-debt-collectors

The Consumer Financial Protection Bureau has come down on 2 of the nation's largest debt buyers for deceptive and illegal debt collection practices.

Why should I care?

Both enforcement actions involve a significant amount of restitution.

As a result of the settlements, Encore Capital Group must pay up to $42 million in consumer refunds along with a $10 million penalty. It must also cease collection on more than $125 million worth of debts. Portfolio Recovery Associates must pay $19 million in consumer refunds as well as an $8 million penalty. It must cease collection on more than $3 million worth of debts.

What does the CFPB allege?

According to the consumer watchdog agency, both companies illegally attempted to collect debt that they knew, or should have known, was likely inaccurate or unenforceable. They also allegedly misrepresented their intent to prove debts they sued over, relied on misleading, robo-signed court filings to sue and sued or threatened to sue past the statute of limitations.

The CFPB says San Diego-based Encore specifically failed to properly investigate consumer disputes and made harassing phone calls. Portfolio, headquartered in Norfolk, Virginia, allegedly misled consumers into agreeing to receive auto-dialed cellphone calls.

The rest of the story

Both companies maintain their practices were in accordance with the law.

"After rigorously and thoroughly scrutinizing seemingly countless aspects of our business for more than a year, the CFPB ultimately identified only 2 key issues warranting consumer refunds," Kenneth Vecchione, president of Encore, said in a written statement. "While we disagree with the CFPB's positions on these 2 issues, we chose to agree to a settlement so we can move forward."

"It was time to end this drawn-out process and eliminate the threat of litigation, so we can focus with renewed vigor on serving our customers and growing our business," Steve Fredrickson, CEO of PRA Group, Inc., of which Portfolio Recovery Associates is a subsidiary, said in a written statement.

An eye on debt collection

Encore and Portfolio are not the only 2 companies to come under the CFPB's fire over debt collection practices. This summer, JPMorgan Chase settled with the agency over selling bad credit card debt and illegally robo-signing court documents.

New rules pertaining to the debt collection industry are in the works, CFPB Director Richard Cordray said during prepared remarks. He also urged current industry members to review recent consent orders.

"Regardless of whether you are a debt seller or a debt buyer, all players in the collections market need to do their part and invest the resources to ensure they are collecting the right amount from the right consumer," Cordray said.

Protect yourself

Consumers who are being contacted about a debt should familiarize themselves with their rights. Federal law prohibits debt collectors from using abusive language, harassing you with repeat phone calls, calling before 8 a.m. or after 9 p.m. unless you agree and calling you at work once asked to stop.

You can find more tips for dealing with debt collectors in this Bankrate article.

Follow me on Twitter: @JeanineSko.

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20 Comments
Nohoya
October 04, 2015 at 1:43 pm

No ohyeaisthatright, you complain each time and every day too.

Just wondering……
September 27, 2015 at 12:42 pm

Can't we all just get along? and find out if we qualify as recipients of the refunds.

reader
September 12, 2015 at 2:55 pm

ohyea, you are the one that needs to learn how to spell !!!

Mom
September 12, 2015 at 1:48 pm

Lana, Most businesses pay taxes on an accrued basis so they paid tax on the money not collected yet. Then, when they can't collect and write off the debt, they get a tax credit. You can't expect the business to not only miss out on their rightful income and pay the tax on it too. This is why the IRS charges the non-paying consumer. The other option is for our taxes to increase, because someone not paying their bills, is causing a greater deficit.

ddd
September 12, 2015 at 12:04 pm

learn to spell first oyeaknowjcksht

G.Watts
September 12, 2015 at 10:07 am

Ducking debt is also a tactic of the rich too.... just ask Donald Trump......

Harry
September 12, 2015 at 9:49 am

So if I rent you an apartment and don't know that you have a history of not paying your debts, I would be just another unpaid sap to get shafted out of money because our new generations don't want any accountability. Whether it's for debts the don't pay or the police the run from, a liberal society will be our demise.

Lana
September 12, 2015 at 9:19 am

Credit is a big issue in todays generation but there is something to be be said about the older peoples wisdom also if you have to buy on credit then you do not need it. If you depend on credit then control it and do not get in over your head because it is another bill you need to pay so just do not let it get out of hand when it comes to buying power.I think that your credit score should not be used by business's to determine what you pay in rent or car insurance or a job you get hired for because as we all know we can not all have perfect credit it is part of life that we live in and it should not be made more difficult based on a credit score.The IRS should not be able to use charge off debt against us either putting it to our taxes when we file showing it as earned income so we have to ask who are the bigger thieves credit cards-debt collectors--IRS

ohyeaisthatright
September 11, 2015 at 7:07 pm

Every one on here complaining knows they owe a debt but want to pretend like it was never theres. Pay your bills people.