The Consumer Financial Protection Bureau (CFPB) recently sanctioned two of the largest debt collectors for deceptive and abusive debt collection practices. The two entities are Portfolio Recovery Associates and Encore Capital Group, Inc. Encore’s subsidiaries are Midland Funding LLC, Midland Credit Management, and Asset Acceptance Capital Corp. These entities buy delinquent or charged-off debt from banks and other companies, usually for pennies on the dollar, and then try to collect the debt from the consumer.
The CFPB determined that these companies engaged in numerous illegal and deceptive practices, including: attempting to collect on unsubstantiated or inaccurate debt, suing or threatening to sue consumers after the statute of limitations had expired, pressuring consumers to make payments using misrepresentations, disregarding consumer disputes, making harassing collection calls, and relying on robo-signed documents to file tens of thousands of lawsuits against consumers, often without any intention or ability to prove the debt.
The CFPB imposed a number of sanctions. Encore was ordered to pay up to $42 million in refunds, a $10 million penalty, and to stop collection on $125 million of debt. Portfolio Recovery must pay $19 million in refunds, an $8 million penalty, and must stop collection on $3 million of debt. Among other penalties, the two companies were ordered to reform their debt collection practices, and are prohibited from reselling the debt they buy to other debt collectors.