CFPB Enters Into Consent Order With Debt Collector And Its Owner To Settle Alleged FDCPA And CFPA Violations

Ballard Spahr LLP

Ballard Spahr LLP

The CFPB announced that it has entered into a consent order to settle the CFPB’s allegations that a debt collector, Yorba Capital Management, LLC (Yorba), and its owner, Daniel Portilla, Jr., violated the Consumer Financial Protection Act and that Yorba violated the Fair Debt Collection Practices Act.  The consent order permanently bans both Yorba and Mr. Portilla from the debt collection business and orders Yorba and Mr. Portilla to pay consumer redress of $860,000 and a civil money penalty.  However, due to the respondents’ limited financial resources, the order suspends full payment of the $860,000 judgment upon their payment of a $2,200 civil money penalty.

The consent order sets forth the CFPB’s conclusions that Yorba and Mr. Portilla engaged in deceptive conduct in violation of the CFPA’s UDAAP prohibition and that Yorba engaged in conduct that violated the FDCPA provisions prohibiting a debt collector from threatening to take action it did not intend to take and using false representations and deceptive means to attempt to collect debts based on the following CFPB findings:

  • Yorba mailed letters to consumers titled “Litigation Notice” that (1) contained a  “Case no.” and a case caption similar to what would be found in a court filing and statements threatening to file suit against a consumer if the consumer did not pay the amount indicated, (2) contained statements implying that some form of legal action had already been commenced against the consumer, and (3) made representations about the consequences to the consumer if Yorba were to commence a lawsuit and obtain a judgment.
  • Yorba and Mr. Portilla did not employ law firms or lawyers, did not file lawsuits against consumers to collect debts, and had no intention of suing consumers or taking other legal action.

In its press release, the CFPB referred to the consent order as its “latest action against collectors that have used false threats to collect debts” and described consent orders entered into 2018 and 2019 under former Director Kraninger’s leadership that involved claims of false threats.  With both Acting Director Uejio and Director-nominee Rohit Chopra having identified unlawful debt collection practices as a CFPB priority target, debt collectors should expect even greater scrutiny from the CFPB in 2021.

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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