Consumer Finance Insights
July 25, 2019

CFPB and New York AG Settle Claims with Debt Collection Group for $65 Million

On July 25, 2019, the Consumer Financial Protection Bureau (“CFPB”) and the New York Attorney General (“New York AG”) announced that they have filed two proposed settlements with three debt collection companies and two individuals who conducted business together in Buffalo, New York.  The proposed settlements were filed in the U.S. District Court for the Western District of New York.

The CFPB and the New York AG alleged that the defendants engaged in violations of sections 1031(a) and 1036(a)(1) of the Consumer Financial Protection Act of 2010 (“CFPA”), 12 U.S.C. §§ 5531(a), 5536(a)(1), sections 807 and 808 of the Fair Debt Collections Practices Act (“FDCPA”), 15 U.S.C. §§ 1692e, 1692f, and various New York consumer protection statutes.  Specifically, the CFPB and New York AG alleged that since at least 2009, the companies purchased consumer debt, inflated the debt, and used illegal tactics to collect as much money as possible from consumers.  They further alleged that the companies misrepresented to consumers that they owed sums they did not owe, were not obligated to pay, or otherwise did not have a legal right to collect, falsely threatened consumers with legal action, and impersonated law enforcement officials, government agencies, and court officers.

Under the terms of the first proposed settlement, two companies and one individual would be permanently​ banned from acting as debt collectors, will be further enjoined from engaging in any misrepresentation or omission in connection withe a consumer financial product, and must pay $60 million, which includes $40 million for consumer redress and $10 million in civil penalties to both the CFPB and the State of New York.  Under the terms of the second settlement, the second individual and his company will likewise be banned from the industry, and will also be ordered to pay $4 million​ in consumer redress, $1 million in civil penalties to both the CFPB and the New York AG.  Per the terms of the second order, those amounts will be suspended subject to those defendants paying a $1 million penalty to the CFPB and $10,000 in consumer redress.