Last week the CFPB and New York Attorney General filed a lawsuit against five debt collection companies and four individuals who own and manage the companies. The complaint alleges the defendants used deceptive, harassing, and otherwise improper methods to induce consumers to make payments to them in violation of the Fair Debt Collection Practices Act (FDCPA) and the Consumer Financial Protection Act (CFPA). The CFPB and Attorney General allege the defendants collected revenues from consumers ranging from “approximately $10 million in 2015 to over $23 million in 2018.” The complaint seeks the refund of monies paid by consumers, disgorgement of ill-gotten revenues, civil money penalties, and injunctive relief.

The defendants are alleged to have:

• “threatened consumers with legal action, including wage garnishment or attachment of property, or arrest and imprisonment, if they did not make payments,” though consumers are not subject to arrest for failure to pay debts and the companies never filed debt-collection lawsuits.
• contacted and disclosed the existence of the debt, either “expressly or implicitly,” to consumers’ “family members, grandparents, … in-laws, ex-spouses, employers, work colleagues, landlords, Facebook friends, and other known associates.” The Bureau alleges the defendants used this tactic as “a form of repossession, telling collectors: ‘If I buy a car and I don’t pay for it . . . they take the car. If I don’t pay for my house, they take the house . . . . [W]e’re taking [their] pride . . . .’”
• falsely claimed that consumers owe more than they do, in order to convince consumers “that paying the amount they actually owe represents a substantial discount.”
• harassed consumers and/or third parties to coerce payment, using “insulting and belittling language” and “intimidating behavior,” placing “multiple calls every day over periods lasting a month or longer,” and continuing to call consumers at work “despite being told the consumer’s workplace prohibits the consumer from receiving such communications.”
• failed to provide the legally required notices informing consumers of their right to know how much they owed and of their ability to dispute the amount or existence of the debt.