CFPB Settles with Debt Collection Company for Alleged CFPA and FDCPA Violations

CFPB sign

On December 8, 2020, the Consumer Financial Protection Bureau (Bureau) announced that it had entered into a consent order​ with a New Jersey debt collection company, resolving allegations that the debt collection company violated the Fair Debt Collection Practices Act (FDCPA) and the Consumer Financial Protection Act (CFPA).

The debt collection company was engaged in the business of purchasing consumer-debt accounts from debt brokers and placing the accounts for collections with collections law firms in the states where the consumers were located (Connecticut, New Jersey, and Rhode Island).  The Bureau alleged that the collections law firms then sent the consumers letters demanding payment of the full past-due amounts, interest, and fees.  Through 2014, the debt collection company sued the majority of consumer who did not settle their accounts in response to these demand letters.  According to the Bureau, the company did so​​ without legally-required state licenses.  Without the required licenses, the company had no legally enforceable claim for payment.  Many of those lawsuits resulted in default judgments against the consumers, after which the company used​ judgment-enforcement mechanisms, such as writs of attachment, execution, and garnishment, to collect on the judgments.  ​

The company does not admit any wrongdoing.  The consent order will require the debt collection company to suspend further collection from affected consumers and pay a civil penalty of $204,000 to the Bureau.