New York AG Announces Court Order Requiring Debt Collectors to Pay $27 Million

On September 21, New York Attorney General Barbara D. Underwood announced a stipulated court order against three entities and individuals for illegal debt collection practices (collectively, “defendants”), which permanently bans the defendants from the debt collection industry and requires collective payment of almost $27 million in restitution and damages.

The court order stems from allegations that the defendants misrepresented themselves to consumers as attorneys or law enforcement officials, and threatened to arrest consumers if their debts were not paid.  Per the Complaint, filed jointly by the New York Attorney General and the Federal Trade Commission, defendants also allegedly added unauthorized amounts to consumers’ debts in the course of engaging in debt collection activities.  The complaint alleges that defendants violated Section 5(a) of the Federal Trade Commission Act, 15 U.S.C. § 45(a), the Fair Debt Collection Act, 15 U.S.C. §§ 1692 et seq., and various New York state laws.

In addition to prohibiting the defendants from engaging in any further debt collection activities, the stipulated court order prohibits the defendants from profiting from consumers’ personal information they collected, and mandates that they must destroy all consumer information in their possession.

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