CFPB Fines Two Largest Debt Buyers
Sharon Edmondson, Washington Legislative Team Member | September 11, 2015
Two of the largest firms that specialize in buying and collecting past due debt will pay a combined $79 million in fines and refunds to borrowers and abandon millions in other accounts for a number of abuses that include pressuring borrowers into paying back more than they owed, according to the Consumer Financial Protection Bureau.
Encore Capital Group and Portfolio Recovery Associates allegedly tried to collect amounts they knew or should have known were inaccurate and couldn't be legally enforced. The firms also allegedly forged court documents when bringing lawsuits en mass against delinquent borrowers. Encore agreed to stop collection on $125 million in debts, and Portfolio will stop pursuing $3 million in debts. Encore will provide $42 million in refunds and pay a $10 million penalty, while Portfolio will refund $19 million consumers and pay an $8 million fine.
The two firms will not be allowed to resell debts they buy to other companies under the deal and must also stop pursuing debts they can't verify, ensure lawsuits they file are accurate, and cancel collection on older debts unless they disclose to the borrower they cannot sue to collect the amount owed. The requirements hint at where the CFPB could take rules it is considering for the broader debt collection industry. Next steps in that area are expected later this year or early next.
You can find the CFPB summary of two Consent Orders entered and reported on September 9th here. The orders can be accessed, in full, through this link as well.