Debt Collector Enters into Consent Order with CFPB to Settle Alleged FDCPA and UDAAP Violations

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Last week, the CFPB announced that that it had entered into a consent order with an Illinois-based debt collection company. According to the settlement, the company’s business consists primarily of purchasing and then collecting on defaulted debt from banks and retail credit card companies. As part of the consent order, the company was ordered to pay approximately $36,800 in restitution to consumers and another $200,000 as a civil monetary penalty to the Bureau.

The conduct alleged by the Bureau relates to statements and representations made by the company during the course of its collections activities (i.e., sending collection letters and making collection calls). Specifically, the CFPB alleged that the company had “regularly and falsely”:

(1) Threatened consumers with arrest, lawsuits, liens on homes, and garnishment of consumers’ bank accounts or wages;

(2) Represented that non-attorney company employees were attorneys, even though the company does not employ attorneys to collect debts or take legal action against debtors; and

(3) Represented that consumers’ credit reports would be negatively affected if they did not pay, even though the company does not furnish any information to consumer reporting agencies.

The Bureau claimed that this conduct constituted deceptive acts and practices under Dodd-Frank’s UDAAP provisions, as well as misleading representations in violation of the Fair Debt Collection Practices Act.

In addition to calling for restitution and a civil monetary penalty, the consent order stipulates that the company must refrain from engaging in the alleged activity, as well as record all incoming and outgoing calls and retain the recordings for the duration of the consent order. The company must also submit a “comprehensive compliance plan” for a determination of non-objection.

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