On March 23, 2023, the CFPB filed a complaint and proposed judgment against Portfolio Recovery Associates, LLC (“PRA”), one of the largest debt collectors in the United States.  If entered by the court, the proposed judgment would require PRA to pay $12.18 million to allegedly harmed consumers and $12 million to the CFPB as a civil penalty.

The current action follows 2015 charges against PRA that resulted in a consent order (the “2015 Order”) in which the CFPB found that PRA violated the Consumer Financial Protection Act (“CFPA”) and the Fair Debt Collection Practices Act (“FDCPA”).  The 2015 Order precluded PRA from engaging in certain activities, including:

• Collecting debts without a reasonable basis,
• Selling debt,
• Threatening or filing collection lawsuits without an intent to prove the debt,
• Filing false or misleading affidavits in debt-collection actions,
• Making false or misleading representations, and
• Collecting or suing on debt that was outside the statute of limitations.

In the CFPB’s new complaint, it alleges that PRA violated the 2015 Order, the CFPA, FDCPA, and the Fair Credit Reporting Act (“FCRA”) and its implementing Regulation V.  Specifically, the Bureau alleges that PRA violated the CFPA and, in some instances, the FDCPA, when it violated multiple conduct provisions from the 2015 Order, including prohibitions on:

• Representing the amount or validity of unsubstantiated debt,
• Collecting on debt without offering to provide necessary documentation to consumers,
• Misrepresenting that it would provide the offered documents within thirty days,
• Collecting on time-barred debt without making required disclosures,
• Initiating debt collection lawsuits without possessing required documentation, and
• Suing to collect time-barred debt.

In addition to the over $24 million that the CFPB is seeking from PRA, it is also seeking to impose broad injunctive relief, which could lay the foundation for future actions against PRA.  While it is possible that the CFPB’s action against PRA could have a ripple effect for other debt collectors, that does not seem likely at this time.  The CFPB claims that PRA violated the CFPA, FDCPA, and FCRA; however, the gravamen of the new complaint against PRA is that it violated the 2015 Order.  Therefore, actions against other debt collectors without this context appear less likely.  However, the CFPB’s lawsuit does demonstrate that the CFPB takes very seriously violations of prior consent orders entered into with the CFPB.

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