CFPB and NY AG Sue over Debt-Collection Practices

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The CFPB and the New York Attorney General recently filed suit in the U.S. District Court for the Western District of New York against several debt collection companies and their owners and managers, alleging violations of state and federal law, including the CFPA, the FDCPA, and New York’s UDAP statute, for debt collection practices dating back to 2015.

Under the FDCPA, debt collection companies cannot make false or misleading misrepresentations or use harassing and intimidating tactics, they cannot disclose debt information to third-parties without consumer permission or a court order, and they must provide consumers with debt verification rights notices.  Under the Consumer Financial Protection Act (CFPA), companies cannot engage in deceptive debt collection acts and practices, and FDCPA violations are themselves violations of the CFPA.

The complaint alleges that the companies disclosed debt information to third-parties without approval, and that they overstated to consumers the amounts owed in order to induce consumers to pay the amounts actually owed. The complaint also alleges that the companies failed to provide consumers with statutorily-required notices regarding debt-verification rights. 

The owners and managers were individually named as defendants because of their alleged control of and involvement in those practices.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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