On November 2, the Consumer Financial Protection Bureau (CFPB) and New York Attorney General (AG) announced the filing of a complaint in the United States District Court for the Western District of New York against participants in a purported New York-based nationwide debt collection scheme.
According to the complaint, the debt collectors purchased tens of millions of dollars of defaulted consumer debt and added $200 to each acquired debt, regardless of whether the law or underlying contracts authorized those additional charges. The debt collectors then attempted to collect the debts themselves through one of the sixty other debt collection firms they controlled. The agencies alleged that while attempting to collect these debts, the debt collectors impersonated law enforcement officers and court officials, threatened consumers with arrest or legal action, used call-spoofing technology to make it appear that they were calling from a government agency, and inflated the amounts owed by adding unauthorized fees and charges. The complaint asserts that these actions violated the Consumer Financial Protection Act, Fair Debt Collection Practices Act, and New York state law. The agencies further allege that the debt collectors profited from their illegal debt collection scheme by funneling tens of millions of dollars annually to the individuals who controlled these affiliated debt collection firms, and relatives of those individuals.
The CFPB and AG seek an injunction permanently barring the debt collectors from future illegal conduct, consumer relief in the form of rescission or reformation of contracts, restitution, and refunds; disgorgement; a $5,000 civil penalty per violation of New York state law; additional civil penalties as authorized by the CFPA; and costs.
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