On September 29, 2020, the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC), along with more than 50 federal and state law enforcement partners, announced a nationwide law enforcement and outreach initiative designed to protect consumers from phantom debt collection, and abusive and threatening debt collection practices.
“The CFPB is actively working to protect consumers from illegal actions of debt collectors,” CFPB Director Kathleen L. Kraninger said in a press release. “We will continue to monitor the financial marketplace, as well as consumer complaints received, in order to ensure that we identify and take action against debt collectors who are violating the law.”
Dubbed “Operation Corrupt Collector,” this recent crackdown includes the filing of more than 50 enforcement actions brought by the CFPB, the FTC, other federal agencies, and 16 different states against debt collectors allegedly engaged in illegal practices. The states include Arizona, California, Colorado, Connecticut, Florida, Idaho, Illinois, Indiana, Massachusetts, New Mexico, North Carolina, North Dakota, New York, Ohio, South Carolina, and Washington.
“Operation Corrupt Collector” includes a case filed by the CFPB and the New York Attorney General against five companies for their participation in an alleged debt collection operation in New York. In CFPB et al. v JPL Recovery Solutions, LLC, et al., No. 1:20-cv-01217 (W.D.N.Y), the CFPB and New York Attorney General’s allege that, from at least 2015, the defendant debt collectors used deception, harassment, and other improper methods to induce consumers into making payments to them in violation of the Fair Debt Collection Practices Act (FDCPA) and the Consumer Financial Protection Act (CFPA). The complaint seeks consumer redress, disgorgement of ill-gotten gains, civil money penalties, and appropriate injunctive relief against the defendants
“Operation Corrupt Collector” also includes five FTC law enforcement actions, including two newly filed cases that allege phantom debt collection—a practice where companies try to collect on debts they cannot legally collect or which a consumer does not owe. For example, in FTC. v. National Landmark Logistics LLC, et al., No. 0:20-cv-02592-JMC (D.S.C.), the FTC, seeking a permanent injunction and equitable monetary relief, alleges that the company and its operators collected more than $12 million from consumers through illegal debt collection practices. The FTC alleges that the defendants used robocalls to leave deceptive debt collection messages for consumers, with defendants claiming that the consumers would face impending legal action about these debts. Further, the FTC alleges that when the consumers returned the calls, the defendants falsely claimed to be from a mediation or law firm, again threatening legal action and using the consumer’s personal information to convince the consumers that these threats were real. In FTC v. Absolute Financial Services, LLC, et al., No. 0:20-cv-02596-JMC (D.S.C.), the FTC similarly seeks injunctive and monetary relief against a company and its operators for allegedly collecting over $5.2 million from consumers through illegal debt collection practices, including deceptive robocalls and threatening consumers with arrest if they did not immediately pay the debt. In both cases, the federal court entered temporary restraining orders against the defendants halting their operations, freezing their assets, and putting them under the control of a receiver.
In addition to the law enforcement actions, the CFPB, FTC, and state and local consumer protection agencies, are also rolling out new information to help consumers know their rights regarding debt collection, including what actions they can take if they receive a call trying to collect on a debt that they do not recognize. For example, the CFPB has directed consumers to tools to help with understanding their rights with respect to debt collectors, found here. And, the FTC has created an online dashboard with information about reports received from consumers on debts not owed and abusive and threatening collection practices.