Newsroom

September 09, 2015

CFPB orders debt collection firms to pay $18M in penalties, $61M in refunds

The nation's two largest debt buyers and collectors must refund millions of dollars to consumers and overhaul their practices under actions taken by CFPB Wednesday.

Encore Capital Group and Portfolio Recovery Associates allegedly bought debts that were possibly inaccurate, lacked documentation or were unenforceable, yet they collected payments from consumers by pressuring them with false statements and lawsuits using robo-signed court documents.

Encore must pay up to $42 million in consumer refunds and a $10 million penalty, and it must stop collecting on more than $125 million worth of debts. Portfolio Recovery Associates must pay $19 million in refunds and an $8 million penalty, plus stop collecting on more than $3 million worth of debts. Both companies must also overhaul their practices and stop reselling debt to third parties.

CFPB said Wednesday that these companies tried to collect debts they knew, or should have known, were inaccurate or could not have been validated or enforced. The bureau said the companies also filed lawsuits against consumers without having the intent to prove many of the debts and won many of the suits because the consumers failed to defend themselves.

Both practices violate the Fair Debt Collection Practices Act and the Dodd-Frank Act.