CFPB settles lawsuit filed against debt collectors and debt buyers for alleged violations of CFPA, FDCPA, and 2015 consent order

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The CFPB announced last week that it has entered into a settlement of the lawsuit it filed in September 2020 against Encore Capital Group, Inc., Midland Funding, LLC, Midland Credit Management, Inc., and Asset Acceptance Capital Corp. alleging that the defendants engaged in various unlawful practices in violation of the FDCPA, the CFPA, and a 2015 administrative consent order between the defendants and the CFPB.  The stipulated final judgment and order will require the defendants to pay $79,308.81 in consumer redress and a $15 million civil money penalty.

In its complaint filed in a California federal district court, the Bureau alleged that the defendants violated the consent order by suing consumers without possessing documentation as required by the consent order, using law firms and an internal legal department to engage in collection efforts without providing disclosures required by the consent order, and failing to provide consumers with loan documentation upon request as required by the consent order.  It also alleged that the companies violated the consent order, the CFPA, and the FDCPA by suing consumers to collect debts on which the applicable statute of limitations had run and violated the consent order by attempting to collect on debts for which the applicable statute of limitations had run without providing disclosures required by the consent order.  The Bureau further alleged that the companies violated the CFPA by failing to disclose possible international transaction fees to consumers.  The Bureau also alleged that each violation of the consent order constituted a violation of the CFPA.

In addition to payment of consumer redress and a civil money penalty, the settlement will require the defendants to make certain disclosures regarding international transaction fees and extends for five years various requirements of the consent order involving documentation the defendants must possess before initiating a collection lawsuit, disclosures the defendants must provide to consumers when engaging in collection efforts, and collection of time-barred debts.

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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