New York DFS Enters Into Consent Order With Payday Debt Collector and Servicer for $12 Million

On September 25, 2017, New York’s Financial Services Superintendent announced​ that the Department of Financial Services (DFS) had entered into a consent order  with a payday loan debt collector and a payday loan servicer that serviced and collected on payday loans made to New York consumers that were illegal in New York.  The DFS alleged that the debt collector violated the Fair Debt Collection Practices Act,15 USC. §§ 1692(f)(i), 1692(c)(2), and the New York Debt Collection Procedures Law, N.Y. General Bus. Law § 601(2), by collecting or attempting to collect on more than 20,000 unenforceable payday loan debts between 2011 ​and 2014.  The DFS also alleged that the loan servicer made intentional representations to consumers and repeatedly called them at home and at work, sometimes making threats against consumers.

Under the consent order, the companies agree to provide approximately $12 million in loan forgiveness to affected New York consumers and to cease collection and servicing activities in New York.  The debt collector also agreed to discharge all debt associated with those accounts; to move to vacate any judgments it obtained on those accounts; and to release any pending garnishments, levies, liens, restraining notices, or attachments relating to any of those judgments.  The loan servicer will also close any pending New York accounts and cease communicating with consumers regarding those accounts.