Deceptive Debt Collection Practices Targeted by CFPB

Under the Fair Debt Collection Practices Act (FDCPA), debt collectors cannot harass or threaten debtors in order to collect payments, and they cannot engage in false or deceptive debt collection practices with the aim of collecting money owed. Yet creditors and debt collectors do not always abide by the FDCPA. What happens in the event that a debt collector uses deceptive collection practices in order to recover on a debt? The Consumer Financial Protection Bureau (CFPB) can take action against that collector. According to a recent news release from the CFPB, the Bureau has cited both Encore Capital Group and Portfolio Recovery Associates for buying “debts that were potentially inaccurate, lacking documentation, or unenforceable.”
How Does the FDCPA Define Deceptive Debt Collection Practices?
It is important for consumers to know their rights and to understand that certain federal laws were designed to protect them from unfair practices by debt collectors. Specifically, Section 807 of the FDCPA protects consumers from “false or misleading representations” used by collectors to recover debts. The law specifically states:
“A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.”
The law goes on to define false representation in terms of:
  • Character of the debt;
  • Amount of the debt; and
  • Legal status of the debt.
Under the FDCPA, debt collectors also are banned from threatening “to take any action that cannot legally be taken or that is not intended to be taken.”
Companies Must Verify Debt Before Taking Action
When a debt collection business does not abide by the FDCPA, the CFPB can take numerous actions against it. In the case of Encore Capital Group and Portfolio Recovery Associates, the Bureau has ordered these companies to do the following:
  • Overhaul debt collection practices;
  • Overhaul litigation practices;
  • Cease selling debts to third-party buyers;
  • Pay consumer refunds;
  • Pay penalties; and
  • Stop attempting to collection of million in consumer debt.
In terms of the consumer refunds that the companies will have to pay, the CFPB has ordered Encore to provide up to $42 million in refunds to consumers, along with a $10 million penalty. Portfolio Recovery Associates has been ordered to provide $19 million in consumer refunds and to pay a penalty of $8 million. In total, the two companies have been ordered to cease collection actions on nearly $130 million in combined debts.
The director of the CFPB emphasized that the two companies are among the largest debt buyers in our country, and the Bureau will not stand for deceptive or unfair debt collection practices. In total, the companies have bought more than $200 billion in unpaid consumer debts. For millions of dollars of that debt, the companies engaged in illegal practices. According to the CFPB, those practices included:
  • Providing consumers with incorrect balances;
  • Stating incorrect interest rates; and
  • Giving incorrect payment due dates.
In short, companies simply cannot provide “approximate” information with regard to balances, interest rates, and account due dates. Yet the CFPB alleges that the debt buyers did just this.
Contact an Oak Park Consumer Protection Lawyer
If you believe you have been the target of unfair or deceptive collection practices, it is important to speak with an experienced Oak Park consumer protection attorney about your case. Contact the Emerson Law Firm to learn more about how we can assist you.
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