WBK Industry News - Litigation Developments

CFPB Reaches Settlement with Debt Collector over Deceptive Practices

Last week, the CFPB issued a Consent Order against a New Jersey based debt-collection agency (Agency) over allegations that the Agency regularly violated the FDCPA and the CFPA in the course of their collection activity.

According to the Bureau’s Consent Order, the Agency began purchasing and collecting on consumer debt beginning in 2012, and hired debt collection law firms to assist in their collection efforts by suing debtors in 2014.  However, the Bureau alleges that the Agency did not have the requisite licenses necessary under state law to threaten to sue, sue and collect on judgments in three states — New Jersey, Rhode Island, and Connecticut.  The Agency’s misrepresentation to debtors that they had a legal right to recover the debts owed forms the basis of the Bureau’s Consent Order.

In Settlement, the Order requires the Agency to refrain from any further action to collect on judgments against debtors in New Jersey, Rhode Island, and Connecticut, and that the Agency take all action necessary to vacate their existing judgments in these states.  The Agency must also notify all debtors with existing agreements that their obligations under those agreements have been satisfied.  Further, the Agency is subject to a civil money penalty of $204,000 to be paid to the Bureau.

In the future, the Agency is required to alert the Bureau of any developments, such as any bankruptcy or insolvency proceedings, that could affect their ability to comply with the Consent Order.  In addition, the Agency is required to submit a compliance report updating the Bureau of the Agency’s work to continue to comply with the FDCPA and the CFPA within 90 days of the effective date of the Consent Order.

Although the Agency has consented to the issuance of this Order, it has done so without admitting or denying any wrongdoing, admitting only the facts necessary to establish the Bureau’s jurisdiction in this proceeding.