Last week, the California Department of Financial Protection and Innovation (DFPI) brought its first enforcement action against a debt collector and debt buyer for violating the state’s Consumer Financial Protection Law (CCFPL). The DFPI’s Desist and Refrain Order and Order Assessing Penalties (totaling $375,000) charges F & F Management Inc. (F&F) with violating the CCFPL by (1) engaging in unfair acts and practices, and (2) and violating the CA Rosenthal Fair Debt Collection Practices Act (Rosenthal), the CA Consumer Credit Reporting Agencies Act (CCRAA), and the federal Fair Debt Collection Practices Act (FDCPA). The CCFPL makes it unlawful for a covered person to engage in any unlawful, unfair, deceptive, or abusive act or practice with respect to consumer financial services or products or to offer or provide a consumer financial product or service not it conformity with any consumer financial law.
The DFPI charges F&F with violating Rosenthal by leaving automated messages for consumers in which it made false representations and threats to take action prohibited by the Rosenthal Act, including that it had commenced legal proceedings when it had not done so and would contact the consumer’s employer.
It also charges F&F with engaging in unfair acts and practices in violation of the CCFPL and with violating the CCRAA by engaging in “debt parking.” This practice, also referred to as “passive debt collection,” involves the placing of purported debts on consumers’ credit reports without first attempting to communicate with consumers about the debts. (In December 2020, the FTC announced a settlement of its first enforcement action targeting “debt parking.” In addition, the CFPB’s final debt collection rules, which become effective November 30, 2021, prohibit reporting debts to consumer reporting agencies until after a debt collector attempt to make contact with the consumer.)
F&F is also charged with violating Rosenthal and the FDCPA by failing to provide validation notices and falsely representing that additional amounts would be added to consumers’ debts if they were not paid. (F&F’s FDCPA violations are charged both directly and indirectly as Rosenthal violations. Rosenthal requires “debt collectors,” a term that includes first-party collections, to comply with the FDCPA.)