Debt Collectors’ Big Lies And 140,000 Complaints A Month

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It turns out debt collectors tell big lies. Surprised? And what about a debt collector that generates about 140,000 complaints a month. Read on.

The Consumer Financial Protection Bureau (CFPB) charged the two largest debt collectors in the U.S. with using deceptive and illegal tactics to collect outdated debts and money that consumers might not have owed. 

Encore Capital Group and Portfolio Recovery Associates won’t call anymore. Instead the companies will refund consumers money, stop collecting the disputed debts and overhaul their practices.

Encore, the largest debt buyer in the country, will refund $42 million and pay a $10 million penalty.

Portfolio Recovery Associates, the second largest debt buyer in the country,  will refund $19 million and pay an $8 million penalty. 

Just to give you an idea of the scale, Encore paid $4 billion for 60 million accounts theoretically worth about $128 billion dollars.

In a consent agreement, the CFPB says that from 2009 to 2015 Encore, based in San Diego, California, bought debt that credit card companies and telephone companies stopped bothering to collect. Encore and its subsidiaries Midland Funding, Midland Credit Management and Asset Acceptance Capital paid pennies on the dollar for each account and then attempted to collect the full amounts.

The CFPB said the Encore companies did very little to determine whether the records of these accounts actually reflected what people owed. Consequently, the debt collectors demanded payment of money people might not have owed or legally should not have been collected because the statute of limitations had passed.

When consumers didn’t pay, Encore used harassing and persistent phones calls and launched lawsuits that often ended in the company’s favor because consumers didn’t show up to defend themselves in court.

The CFPB says Encore:

  • Began lawsuits when they had no intention of proving that people owed money.
  • Used misleading affidavits and illegal robo-signed documents to churn out lawsuits.
  • Failed to let consumers know that the debt collectors had to prove consumers actually owed the money.

And people did complain. At one point, Encore received about 140,000 consumer complaints a month.

Portfolio Recovery Associates, headquartered in Norfolk, Virginia, according to the settlement with the CFPB bought more than $4.7 billion of old debt from banks, consumer finance companies, and auto finance companies. It too failed to make sure that the debts were owed or legally collectable.

The company pressured consumers to pay debts they might not owe by threatening lawsuits. It also violated the law by making harassing calls to consumers’ cell phones early in the morning or at inconvenient times and misleadingly told consumers they had to accept those calls.

The CFPB says Portfolio Recovery Associates also filed lawsuits it never intended to pursue, knowing that most consumers wouldn’t fight them.

No one goes to prison here. But consumers do get refunds and will stay on top of the story to let you know how the process works. 


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Barbara Nevins Taylor

As the winner of 22 Emmy Awards and a slew of journalism honors and awards, I created to give you the straight story about complicated stuff. Tell us what you want to know and we'll get you the answers.