CFPB Settles with Debt Collector over CFPA and FDCPA Violations

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The CFPB recently issued a consent order against a debt collection company and its owner over alleged violations of the CFPA and FDCPA involving misleading notices sent to consumers.  The consent order imposes an $860,000 judgment and a permanent ban from any debt collection activities along with other requirements.

The debt collector allegedly sent consumers “litigation notices” that falsely represented that consumers would be sued if they did not pay the debt amount on the notices.  The debt collector sent these notices, which contained a case name and number and warned consumers of “further legal action,” despite not actually filing lawsuits or obtaining judgments against consumers.  The CFPB determined that sending these litigation notices resulted in violations of the CFPA’s prohibition on deceptive acts or practices and the FDCPA’s prohibition on the use of false representations or deceptive means to collect any debt.

The consent order, among other things, permanently restrains the company and its owner from participating in debt collection activities.  Additionally, although the $860,000 judgment has been suspended due to an inability to pay, the consent order also imposes a civil money penalty of $2,200.

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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