Today, the Consumer Financial Protection Bureau (CFPB) took action against one of the largest debt collectors, Portfolio Recovery Associates, and filed a proposed court order against the company on the grounds of alleged illegal practices.

The CFPB is calling on the court to require that the agency pay over $24 million in restitution for allegedly violating a previous order, as well as failing to properly investigate past consumer disputes. Here’s what we know so far.

Debt collection giant accused of continual defrauding

There are two major accusations being made against Portfolio Recovery Associates. The primary offense found by the CFPB involves a 2015 lawsuit in which the company was found to be engaging in illegal collection practices.

Back in September 2015, the CFPB ordered the agency to pay over $27 million in restitution to consumers for deceptive tactics and misleading practices. The order banned the following behavior:

  • Selling debt
  • Making misleading or false statements
  • Collecting debt with no legal basis
  • Filing false affidavits
  • Collecting debt outside of the statute of limitations

However, today’s complaint reported that the company violated the 2015 order and engaged in practices that breach both the Fair Debt Collection Practices Act and the Consumer Financial Protection Act.

CFPB claims multiple requirement violations

The CFPB is charging Portfolio Recovery Associated with a number of 2015 order violations during the five year period.

Failing to support claims

The CFPB is charging the agency with making at least tens of thousands of unsubstantiated, disputed debt representations without reviewing the required documentation to support these claims. It’s also been charged with not providing the necessary disclosures when collecting debts beyond the statute of limitations.

Claiming potential legal action

According to the CFPB press brief, Portfolio Recovery Associates’ lawyers sent millions of letters to consumers, notifying them of potential legal action without offering all of the proper documentation. It was also alleged that thousands of legal actions were initiated without providing the required documentation as well.

Misrepresenting the proof of documentation timeline

In the letter notifying consumers of the potential for legal action, Portfolio Recovery Associates stated that upon the consumers request, it would provide proof of documentation within 30 days. However, it was found that these documents weren’t provided in a timely manner; thus impeding the required debt collection process.

Incorrectly pursuing debt outside of the statute of limitations

Portfolio Recovery Associates is being accused of not providing the required disclosures when collecting on older debt that had passed the statute of limitations. The press brief claims that the company estimated what the statute of limitations was once they purchased the debt, and in some cases, it incorrectly estimated the date.

It’s also alleged that the agency filed lawsuits for debt past the statute of limitations, which renders the debt too old for collections. It was claimed that they misled consumers into thinking that they had to repay the debt, when in reality, they were no longer legally responsible for those debts.

Portfolio Recovery Associates also found to have conducted unlawful investigations

The CFPB is also alleging that the agency is guilty of violating the Fair Credit Reporting Act and it’s implementation of Regulation V. It was stated that it didn’t give consumers the correct information when disputing their collections notice and when the dispute wasn’t accepted, it failed to give consumers the information needed to further investigate.

The proper investigations were also alleged on multiple fraud or identity theft cases. The agency reportedly didn’t conduct investigations from a holistic standpoint and didn’t consider all of the information necessary for a case of this nature.

What’s more, Portfolio Recovery Associates is also under fire for failing to resolve disputes within the required timeframe. The CFPB asserts that this occurred on at least tens of thousands of occasions.

If approved, defrauded consumers to receive $12 million in restitution

If entered by the court, the collection agency will be legally responsible for refunding over $12 million to qualifying defrauded consumers. It will also be prohibited from collecting debts without the documentation that proves the consumer’s responsibility and will be required to respond to disputes in a timely manner.

Along with paying the $12 million to consumers directly, the CFPB is requiring that it pays a $12 million dollar fine in penalties, which would be deposited into the victim’s relief fund.

What consumers need to do

If you believe you’re a victim of fraudulent behavior or misleading debt collection practices, you may be entitled to a restitution payment. However, this is only a proposed order; the court still has to approve it for any action against the collection agency to take place.

As of now, consumers do not need to take any immediate action and need to be on the lookout for any news or new information from the CFPB on the court’s review. If you’re currently working with Portfolio Recovery Associates and believe you may qualify, keep working with the agency. It’s imperative that you keep in regular contact with the collector and remain compliant so you don’t run into legal trouble.