The Consumer Financial Protection Bureau (CFPB) and the New York Attorney General filed a complaint against a debt collection agency based in Buffalo, N.Y., for deceiving millions of consumers. (Surprisingly, many debt collectors make Buffalo their home.) Two men operated three companies, Northern Resolution Group, Enhanced Acquisitions, and Delray Capital, and up to 60 related firms to purchase defaulted consumer debts, among them payday loans, valued in the millions. They then allegedly broke numerous state and federal laws to collect them, including the Fair Debt Collection Practices Act (FDCPA) and the Consumer Financial Protection Act (a chapter of the Dodd-Frank Act). The case is important because New York debtors should know when the tactics debt collectors use are illegal as well as the consequences.
One of the most blatant violations the companies engaged in was adding $200 to the face value of every single defaulted debt they attempted to collect on. Aside from being illegal, this activity even breached agreements these companies made with some of the creditors that sold them the debts in the first place. As is common with illegal debt collections, the companies added unauthorized fees too. In some cases they inflated the balances by 600 percent. However, the complaint does not specify if these were low balances to begin with.
The companies also threatened to refer their claims against debtors to criminal prosecutors, which is barred by the FDCPA, and they claimed they had already sued debtors when they never filed a single lawsuit. One Enhanced Acquisitions employee posed as an officer from “Los Angeles County Courts,” and told a borrower that she had no time to find a lawyer because she would be arrested the next day for check fraud. The employee also contacted the debtor’s relatives and used the same story, even though communicating with relatives and threatening arrest are illegal debt collection acts. The companies used fake government email addresses and call-spoofing technology to make it appear they were calling from government phone numbers.
The two men masterminding the schemes allegedly profited in the tens of millions thanks to their deceptive tactics.
It’s not often that one hears of joint operations between state agencies and the CFPB against such large, unscrupulous debt collection operations that took so much from consumers. The lawsuit was filed in federal court in the District of Western New York. The CFPB’s press release is here.
Debtors who are concerned about debt collectors’ tactics should read these posts on what debt collectors must say in collection letters and strategies for preventing debt collection calls.
If debt collectors are hounding you, then bankruptcy can wipe that debt away. A discharge order is good against almost any consumer debt, no matter who owns it, and violating the order comes with severe penalties.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced fair debt collection practices act Bruce Weiner for a free initial consultation.
