CFPB and NY AG Bring Enforcement Action and Proposed Stipulated Judgement Against Debt Collection Ring

Last week, the CFPB and the New York Attorney General filed a proposed stipulated judgement and order in their case against a group of New York-based debt collectors.  If ordered, the judgement would permanently ban several debt collection companies, and their owners and managers, from the debt collection industry and require them to pay a minimum of $4 million in penalties.  The proposed stipulated judgement seeks to settle a lawsuit against the defendant companies and their owners and managers alleging violations of state and federal laws, including the CFPA, the FDCPA, and New York’s UDAP statute.  The prior complaint alleged that the defendants purchased defaulted consumer debt and illegally attempted to collect the debts by using deceptive and harassing methods against consumers.

These methods included, (i) falsely threatening consumers with arrest, imprisonment, and legal action, (ii) disclosing debt information to third parties without consumer approval, (iii) overstating the amounts owed in order to make consumers believe the actual amounts owed represented a discounted amount, (iv) repeatedly harassing consumers with phone calls, and (v) failing to provide consumers with statutorily-required notices regarding debt-verification rights. 

As part of the defendants’ agreement to this proposed stipulated final judgement, the defendants would be required to permanently exit the debt collection industry.  Furthermore, the defendants would be required to pay a $2 million penalty to the CFPB, and a $2 million penalty to the New York Attorney General, with each penalty increasing to $2.5 million if there is a failure to make the payments on time.

CFPB’s press release can be found here, and WBK’s previous article on this case can be found here.