CFPB Settles Cases

I apologize if i am in the wrong place, but I have good news their laddies and lassies and there is no blarney about it.  Looks like Portfolio and Encore, owner of midland got hit with some hefty fines from the CFPB.
http://www.acainternational.org/news-pra-grou ... cfpb-36824.aspx
PRA Group and Encore Capital Group Reach Settlement with CFPB
Sep 09, 2015
Both companies addressed the CFPB’s regulation of the debt buying and debt collection industry and upcoming rulemaking in response to their settlement agreements.
Two companies in the debt buying industry have reached settlement agreements with the Consumer Financial Protection Bureau to resolve alleged issues with their debt buying practices and move forward in working with clients and consumers.
PRA Group announced on Wednesday that its subsidiary Portfolio Recovery Associates LLC “successfully negotiated an agreement that will not materially impact operations and will allow the company to focus on future opportunities without distraction and avoid costly and time-consuming litigation,” according to a statement from the company.
Encore Capital Group, Inc. also announced a separate settlement with the CFPB on Wednesday. The settlement includes a civil payment and consumer refunds connected to two isolated issues, which are not in current practice and changed some time ago, according to Encore.
“After rigorously and thoroughly scrutinizing seemingly countless aspects of our business for more than a year, the CFPB ultimately identified only two key issues warranting consumer refunds,” said Kenneth A. Vecchione, president and CEO of Encore. “While we disagree with the CFPB’s positions on these two issues, we chose to agree to a settlement so we can move forward.”
The CFPB found that both companies allegedly, “bought debts that were potentially inaccurate, lacking documentation or unenforceable,” according to a news release on the enforcement action. The CFPB also reports the companies collected payments without verifying the debts and issued consent orders against Encore and PRA Group.
Its enforcement action includes a requirement for both companies to “overhaul” their debt collection and litigation practices and stop reselling debts to third parties, according to the news release.
Portfolio Recovery Associates must pay $19 million in consumer refunds and an $8 million penalty to the CFPB’s Civil Penalty Fund, and stop collecting on more than $3 million in debts, according to the CFPB
“It was time to end this drawn out process and eliminate the threat of litigation, so we can focus with renewed vigor on serving our consumers and growing our business,” said Steve Fredrickson, chairman and CEO of PRA Group, Inc. “Given the circumstances, we went the extra mile to achieve closure, despite our objection to the CFPB’s characterization of PRA’s business practices.”
Encore is required to pay up to $42 million in consumer refunds and a $10 million penalty to the CFPB’s Civil Penalty Fund and stop collection on more than $125 million in debts.
According to Encore, the consumer refunds in the settlement are tied to alleged issues regarding time-barred debt and dispute language in litigation. Encore supports the disclosure of time-barred debt even though a number of courts have found there is no requirement to do so under governing law, according to the company’s statement.
“With both issues, Encore maintains that it acted in accordance with all relevant laws. When the CFPB provided a different interpretation, Encore, in keeping with its industry leadership in consumer-centric approaches, chose voluntarily to change its practices, although not agreeing with the CFPB’s position. These best practices were implemented long before they became requirements of this settlement.”
Encore says all of the CFPB’s requirements in the enforcement action are part of the company’s current operations, and have some have been in place for several years. “With the few adjustments that still need to be made, it is only a matter of fine-tuning existing practices.”
CFPB Industry Rulemaking
Both companies addressed the CFPB’s regulation of the debt buying and debt collection industry and upcoming rulemaking in response to their settlement agreements.
During the course of its negotiations with the CFPB’s enforcement unit, PRA Group simultaneously worked with the CFPB’s rulemaking division to provide input on potential areas for industry-wide reform, according to the company’s statement. PRA remains committed to that process, and urged the CFPB to follow through with its rulemaking.
“We take great pride in the fact that we have helped lift up this entire industry by adopting stringent protocols for our employees and working with regulators to raise industry standards,” Fredrickson said. “We believe the new rules we have agreed to as a part of this settlement will create more confidence among regulators and our clients that people who have debts are treated fairly and with respect. That said we intend to continue to work with the CFPB going forward to bring about meaningful industry-wide reforms.”
Encore reports the requirements of the settlement appear to represent the CFPB’s expectations for industry best practices.
“We continue to firmly believe that a fair and transparent public rulemaking process is the most appropriate method for establishing industry standards,” said Greg Call, senior vice president and general counsel in the company’s statement. “When we ultimately see final industry rules from the CFPB, we expect them to be largely consistent with what is included in this settlement. We appreciate that the CFPB has removed the ambiguity in our industry by providing much-needed clarity around key issues. Now all companies, large and small, should operate on a more level playing field knowing the CFPB’s expectations.”

"We take great pride in the fact that we have helped lift up this entire industry by adopting stringent protocols for our employees and working with regulators to raise industry standards,” Fredrickson said."

Frederickson is FULL of it. Who does he think he is fooling? Is threatening an elderly and sick man and attempting to coerce him into selling his life insurance policy to pay an out-out-statute and unvalidated debt one of his "stringent protocols?" We DOUBT it, buddy---and are looking forward to the day when your company is FINALLY sued out of existence---ONCE and for all!

Here is the article in in its entirety:

CFPB Takes Action Against the Two Largest Debt Buyers for Using Deceptive Tactics to Collect Bad DebtsEncore and Portfolio Recovery Associates Must Refund Millions of Dollars and Overhaul Debt Collection and Litigation PracticesWASHINGTON, D.C. – Today the Consumer Financial Protection Bureau (CFPB) took action against the nation’s two largest debt buyers and collectors for using deceptive tactics to collect bad debts. The Bureau found that Encore Capital Group and Portfolio Recovery Associates bought debts that were potentially inaccurate, lacking documentation, or unenforceable. Without verifying the debt, the companies collected payments by pressuring consumers with false statements and churning out lawsuits using robo-signed court documents. The CFPB has ordered the companies to overhaul their debt collection and litigation practices and to stop reselling debts to third parties. Encore must pay up to $42 million in consumer refunds and a $10 million penalty, and stop collection on over $125 million worth of debts. Portfolio Recovery Associates must pay $19 million in consumer refunds and an $8 million penalty, and stop collecting on over $3 million worth of debts.“Encore and Portfolio Recovery Associates threatened and deceived consumers to collect on debts they should have known were inaccurate or had other problems,” said CFPB Director Richard Cordray. “Now, the two biggest debt buyers in the market must refund millions and overhaul their practices. We will continue to take action to protect consumers from illegal and obnoxious debt collection practices.”Encore Capital Group, Inc. is headquartered in San Diego, Calif. Its subsidiaries also named in today’s action are Midland Funding LLC, Midland Credit Management, and Asset Acceptance Capital Corp. Together, they form the nation’s largest debt buyer and collector. Portfolio Recovery Associates is the nation’s second largest debt buyer and collector. Portfolio Recovery Associates is a Delaware for-profit corporation headquartered in Norfolk, Va. and is a wholly-owned subsidiary of PRA Group, Inc.As debt buyers, Encore and Portfolio Recovery Associates purchase delinquent or charged-off accounts for a fraction of the value of the debt. Although they pay only pennies on the dollar for the debt, they may attempt to collect the full amount claimed by the original lender. Together, these two companies have purchased the rights to collect over $200 billion in defaulted consumer debts on credit cards, phone bills, and other accounts.The CFPB found that Encore and Portfolio Recovery Associates attempted to collect debts that they knew, or should have known, were inaccurate or could not legally be enforced based on contractual disclaimers, past practices of debt sellers, or consumer disputes. The companies also filed lawsuits against consumers without having the intent to prove many of the debts, winning the vast majority of the lawsuits by default when consumers failed to defend themselves. These practices violated the Fair Debt Collection Practices Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act.Collecting Bad DebtsEncore and Portfolio Recovery Associates illegally attempted to collect debt that they knew, or should have known, may have been inaccurate or unenforceable. Specifically, the CFPB found that the companies:

• Attempted to collect on unsubstantiated or inaccurate debt: Encore and Portfolio Recovery Associates stated incorrect balances, interest rates, and payment due dates in attempting to collect debts from consumers. The companies purchased large portfolios of consumer debt with balances that sellers claimed were “approximate” or that otherwise did not reflect the correct amount owed by the consumer. Sellers also warned the companies that some of the debts they were buying may not have the most recent consumer payments deducted from the balance. Some sellers also represented that documents were not available for some of the accounts. The companies continued purchasing from these sellers and then collecting on that debt without first conducting any investigation to determine whether the debts were accurate and enforceable.

Illegal Litigation PracticesEncore and Portfolio Recovery Associates collected debts through lawsuits and threats of legal action in unlawful ways. Specifically, the companies:

• Misrepresented their intention to prove debts they sued consumers over: Encore and Portfolio Recovery Associates regularly attempted to collect on debts by suing consumers in state courts across the country. In numerous cases, the companies had no intention of proving these debts. They placed tens of thousands of debts with law firms staffed by only a handful of attorneys and in many cases made no effort to obtain the documents to back up their claims. Instead, the companies relied on consumers not filing a defense and winning the lawsuits by default.

• Relied on misleading, robo-signed court filings to churn out lawsuits:Encore and Portfolio Recovery Associates filed affidavits that contained misleading statements in debt collection lawsuits across the country. For example, they both used affidavits that misrepresented that the affiants had reviewed original account-level documentation confirming the consumers’ debts when they had not. The companies also submitted affidavits with documents attached that they claimed were the consumers’ specific account contracts or records when they weren’t. These shortcuts allowed the companies to churn through lawsuits without doing the research and due diligence required to obtain a legitimate judgment.

• Sued or threatened to sue consumers past the statute of limitations:From at least July 21, 2011 to March 31, 2013, Encore sent thousands of letters offering a time-limited opportunity to “settle” without revealing that the debt was too old for litigation. From January 2009 to March 2012, Portfolio Recovery Associates sent similar letters to consumers. Both of the companies also filed cases past the applicable statute of limitations.

• Pressured consumers to make payments using misrepresentations:Encore and Portfolio Recovery Associates made other inaccurate statements to consumers to press them to make additional payments. Specifically:
• Encore falsely told consumers the burden of proof was on them to disprove the debt: In sworn affidavits, Encore falsely told consumers and courts that the debt should be assumed to be valid because the consumer had not disputed it within a certain time period. In fact, Encore had the burden to first prove the debt was owed and accurate before the consumer had to challenge it.
  
  • Portfolio Recovery Associates falsely claimed an attorney had reviewed the file and a lawsuit was imminent: The company’s collectors, who identified themselves as from the “Litigation Department,” misrepresented to consumers that litigation against them was planned, imminent, or even underway. In reality, in many cases, an attorney had not reviewed the account and the company had not decided whether to file suit.

Other Illegal Collection Practices

• Encore disregarded or failed to adequately investigate consumers’ disputes: If a consumer disputed their debt more than 45 days after Encore started collecting, Encore would require the consumer to produce specific documents or other “proof” to support their dispute or it would not conduct the legally-required investigation of the issues raised by the consumer.

• Encore farmed out disputed debts to law firms without forwarding required information: In numerous instances, Encore assigned disputed debt to law firms and third-party debt collectors without informing them that the debt was disputed. As a result, law firms evaluating Encore accounts for litigation did not know which accounts were disputed.

• Encore made harassing collection calls to consumers: Encore called consumers repeatedly or continuously with the intent to annoy, abuse, or harass them into paying. Encore’s subsidiary, Asset Acceptance, made thousands of calls to consumers before 8 a.m. or after 9 p.m. and called hundreds of consumers more than 20 times in a two-day period.

• Portfolio Recovery Associates misled consumers into consenting to receive auto-dialed cell phone calls: For approximately a year, and ending in August 2013, Portfolio Recovery Associates told consumers that they could only prevent collection calls to their cell phones before 9 a.m. if they consented to receive calls on their cell phones from a dialer. The company penalized representatives who failed to adhere to this policy.

Enforcement ActionPursuant to the Dodd-Frank Act, the CFPB has the authority to take action against institutions or individuals engaging in unfair, deceptive, or abusive acts or practices or that otherwise violate federal consumer financial laws. Under the terms of the CFPB orders released today, Encore and Portfolio Recovery Associates are required to:

• Stop reselling debts: The companies are prohibited from reselling the debts they buy to other debt collectors. This will protect consumers from the potential harm that results when debt collectors continue to sell and resell debts that may be inaccurate or lack the business records and information needed to collect them.

• Refund millions of dollars to consumers:
• Encore must pay up to $42 million in refunds: The company must provide refunds where it collected payments by misrepresenting that it could sue on a time-barred debt or by misrepresenting in court that a debt was assumed valid because the consumer did not previously dispute it.
  
  • Portfolio Recovery Associates must pay $19 million in refunds:The company must provide refunds where it collected payments by misrepresenting that an attorney had reviewed a debt or that collectors were calling on behalf of attorneys, and where it collected payments on judgments that it should not have obtained because they were barred by the statute of limitations from suing to collect the debt.

• Cease collections on millions of dollars of debt
• Encore must stop collecting on $125 million of debt: The company must release or move to vacate all judgments and dismiss all lawsuits where it misrepresented that a debt was assumed valid, and stop any attempts to enforce or collect on these judgments. The face value of this debt is estimated at over $125 million.
  
  • Portfolio Recovery Associates must stop collecting on $3 million of debt: The company must release or move to vacate all judgments and dismiss all pending lawsuits it filed past the statute of limitations and stop any attempts to enforce or collect on those judgments, estimated to have a face value of $3.4 million.

• Stop collecting debts they can’t verify: Encore and Portfolio Recovery Associates can’t collect unsubstantiated debt. Under the order, they must review original account-level documents verifying a debt before collecting on it when, for example, a consumer has disputed it, the seller didn’t promise it was accurate or valid, or the debt was part of a portfolio they knew included unsupportable or inaccurate information.

• Ensure accuracy when filing lawsuits: The companies cannot file lawsuits to enforce debts unless they have specific documents and information showing the debt is accurate and enforceable.

• Provide consumers information before filing suit: Encore and Portfolio Recovery Associates must provide consumers with information about a debt, such as the name of the creditor and charge-off balance, and offer to provide consumers with original documents relating to the account before they are allowed to file a lawsuit or threaten to file suit to collect the debt.

• Use accurate affidavits: The companies cannot use affidavits to collect debts unless the statements contained in the affidavits specifically and accurately describe the signer’s knowledge of the facts and the documents attached.

• Reform collection of older debts: Encore and Portfolio Recovery Associates are prohibited from suing or threatening to sue to collect on time-barred debt. They also cannot collect on such debt unless they disclose to consumers that they can’t sue to collect it.

• Pay civil money penaltiesEncore must pay a penalty of $10 million to the CFPB’s Civil Penalty Fun
• Portfolio Recovery Associates must pay a penalty of $8 million to the CFPB’s Civil Penalty Fund.

http://www.consumerfinance.gov/newsroom/cfpb- ... lect-bad-debts/

J. Frederick Hanna, whose case with the CFPB is still in progress, has been linked to Encore (why are we not surprised??):

In court filings, the Consumer Financial Protection Bureau said Encore placed 100,000 cases with Marietta law firm Frederick J. Hanna and Associates.

The regulators have already sued Hanna for violating federal collection law.

The Hanna case is ongoing. Encore and Portfolio Recovery will refund $60 million, pay $18 million in fines and stop collection efforts on nearly $130 million in debts.

http://www.wsbtv.com/news/news/local/debt-col ... al-fines/nncWZ/

Wonderful news, couldn't happen to a better group of scum suckers. Now, when are they going to start prosecuting the CEO and their Board of Directors for extortion and fraud?

When donkeys fly. I would settle to see them being forced into receivership---just as they have forced thousands of others.

ever seen a pig or a donkey in a parachute harness? I have but that was many, many years ago.

July 2010 in Russia, a donkey was put into a harness and then lifted with a parasail.

I just received at 8AM call from someone from this company looking to collect money from a totally disabled person for whom I am conservator.  How they got my name, address and phone number is beyond me.  But I am not going to tolerate this crap for one second.  The person calling sounded like he was from a 3rd world country who could barely speak English.  Most importantly, I would like to thank the person that posted this article because it will be attached to a copy of this article to a cease and desist letter with a copy to the CT Attorney General, Banking Commissioner and my client's court appointed attorney.  Apparently, threat of class action has had zero impact on this company's behavior.  Geez, what a surprise.  I do not understand why these bottom dwellers are still in business but if enough of us take action, maybe they will finally get what they deserve.

By "this company" do you mean Encore/Midland or PRA?

As conservator both you and the alleged debtor in your care are covered the same way by FDCPA 1692c. You may communicate freely with your client's debt collectors and control when and how the both of you are contacted, or not contacted, regarding debt claims. Both of you have standing to sue for 1692c violations. Maybe this is not news to you, but it's a provision the broader audience often doesn't know, and even some collection agencies get wrong.

§ 1692c. Communication in connection with debt collection
http://www.law.cornell.edu/uscode/text/15/1692c

I just got off the phone with Midland asking why they were calling my mothers number at 8:10AM trying to reach someone not living there. They immediately removed the number but actually stated the wrong number in doing so which was mine so they had to remove two numbers, neither of which were ever listed with the debtor. They asked I wait 24 hours for it to take in the system. The fact they even said they would do that was a change of pace for these bottom feeders.

A brothers experience with them had them obtain a judgment without him ever being served. His follow up with lawyers found the court wasn't set up to fix these types of problems and were without any supervision or rules in which to do anything as that court operates outside the jurisdiction of the other civil courts. Huh? Yes, indeed. So once a mistake was made there's no way to amend it unless something was done within 10 days. In his case he knew nothing of a lawsuit being filed until he received junk mail from attorneys that had scoured the docket and that was past the 10 days by a wide margin.

I wonder how many other courts are this screwed up? This one happens to be in Knoxville, TN. He's pretty much screwed as a judgment was issued without him even knowing he was being sued. The attorneys said this happens often and they were sorry but there wasn't anything they could do to appeal it as there aren't any rules to govern the courts in cases like these. Even though he was never served someone must have put down they were knowing there wasn't any recourse.

I'm going to send the above document to him and suggest he bring it up with the attorney general. I would think some changes need to be made. Had he known he could have gone to court and contested it. Looks like they likely wouldn't have been prepared to defend it in the first place if it was legitimate of not. What a sad state of affairs the legal system is.

Disgusted but not surprised.

What I would do is to sue them in Federal court.  FDCPA and FCRA violations.  I am sure a good attorney would be able to come up with something..

Your brother needs to lawyer up and take them to court.  Period.

This is called "Sewer Service":

-an epithet for the intentional failure to provide service of process on a named party in a lawsuit, in order to prevent the party from having a chance to respond.

The phrase refers to the figure of speech of throwing the documents into a sewer.

https://en.wikipedia.org/wiki/Sewer_service

State AG Sues Process Server Over ‘Sewer Service’ in Debt Collection Lawsuits

Minnesota Attorney General Lori Swanson announced Thursday that her office has filed a lawsuit against TJ Process Service, a Minnesota process serving company, and one of its process servers for falsely claiming that some individuals were served with debt collection lawsuits.

False certification by a process server that a lawsuit has been served upon a person is often referred to as “sewer service.”

“One of the most fundamental legal rights in the American judicial system is the right of a person to be notified of claims made against the person in court. ‘Sewer service’ deprives a person of the opportunity to appear in court to defend against the claims made in a lawsuit,” said Attorney General Swanson.

A legal action is started in most courts by service of the lawsuit. This gives notice to the defendant of the lawsuit and the opportunity to appear in court to respond to it.

In some of the cases in question, TJ Process Service — and specifically one server named Jeremy Umland — provided creditors and debt buyers with affidavits falsely attesting that a lawsuit was served on an individual defendant by Umland. In some cases, Umland claimed that a lawsuit was served on a person at their home address, when the person was not home or did not reside at that address.

For example, Umland claimed to serve:

A 73 year old man at a home he had lost to foreclosure three years earlier
A woman at a home address at which she had not lived for 11 years
A person at her home address when records showed that she was at work
In his sworn deposition, the owner of TJ Process Service admitted that Umland engaged in “sewer service” while acting as a process server for the company, as follows:

“Q: [Y]ou believe 100 percent he [Umland] engaged in sewer service?

A: Yes. What percentage and how many times that was, I don’t know.”

The State, through its lawsuit, seeks a court order to determine the scope of the service deficiencies and to remedy situations in which the process server falsely certified that lawsuits were served upon people. TJ Process Service is located in Wadena, Minnesota. Umland lives in Verndale, Minnesota. The State’s lawsuit was filed in Koochiching County District Court.

TJ Process Service also had some of its process servers pre-sign blank pieces of paper and then fed the pre-signed papers through a printer to add details of the service. The company’s secretary then notarized the papers falsely swearing that she had witnessed the process server sign the affidavits under oath attesting to their contents.

This is the fourth lawsuit filed by Attorney General Swanson since 2011 over allegations that debt collectors and debt buyers manipulated the legal process when pursuing Minnesotans in court.

In 2011, the Swanson’s office filed a lawsuit against Midland Funding, LLC alleging that it pursued individual defendants in court using “robo-signed” affidavits in which employees of the debt buyer certified that a person owed a debt even though they had no personal knowledge of this. A settlement required Midland to change its business practices.

In 2013, the AG’s Office filed a lawsuit against United Credit Recovery, LLC alleging that it mass-generated false computer affidavits swearing to the veracity of a debt. In November of 2013 the district court entered an order prohibiting UCR from using these affidavits.

In January of 2014, Swanson filed a lawsuit against Bradstreet and Associates, LLC alleging, among other things, that the company obtained over 2,000 court judgments containing unlawful and usurious rates of interest. The Office obtained a court order vacating over 2,000 judgments against individual Minnesotans and closing over 20,000 collection files.

In addition, in 2013, the Attorney General’s Office drafted and secured passage of a new law regulating debt buyers. Among other things, the law requires a debt buyer, before it may obtain a default judgment, to prove it has sued the right person in the right amount and that the person was served with the lawsuit.

http://www.insidearm.com/daily/debt-buying-to ... ction-lawsuits/

} the court wasn't set up to fix these types of problems and were without any supervision or rules ... The attorneys said this happens often and they were sorry

"Sorry" isn't good enough when a person gets ambushed into a judgment, and I find dubious any shoulder shrugs from the attorneys your brother consulted. Rather than take their word, I would read that court's procedural rules, in particular for grounds to vacate a judgment. Then find another lawyer or go pro se if the rules say something different. I suspect these "defenders" were too lazy or risk-averse to do their jobs and would rather not upset the plaintiff's lawyers with whom they cut fast settlements each month.

Vacating a judgment for improper or unexecuted service of summons is hardly an exotic maneuver. The defendant does need to prove his story, but the upshot is that usually the time limit is much more loose.

I might also guess that Midland's local sharks found the one county court which lets them hide the most sneaky tactics. You don't say if it was Small Claims, where the rules can differ wildly and the lawyers I've jeered above may have been honest. In any case that venue was misused to disadvantage your brother, and if that court won't budge, take the matter higher.

As Wolfman suggested, the ambush litigation gives rise to FDCPA claims, hopefully not aged past a year. Your brother can venue-shop just the same has his opponents, and could a use Federal court counterstrike as leverage against the baby court problem.

Appealing a Small Claims Court Decision
http://www.nolo.com/legal-encyclopedia/free-b ... hapter23-4.html

Vacating A Default Judgment
http://sjconsumerlaw.com/lawsuit-defense/vacating-a-default-judgment
(While I usually avoid commercial sites, this primer from a San Jose law firm does a nice job on the topic and its gist should be broadly applicable.)

Well it doesnt really matter, i went to court over " sewer service" judge vacated it. Then recovery portfolio claimed they did not have to show "proof of production" . I sent the judge a motion to vacate the suit, and attached the consent order issued stating they had to show proof. The judge said, " nope" an e- file is good enough, and with out even getting a hearing the judge granted a summary judgement, all the e-file showed was my name , so what good is it if judges dont enforce the order,its time for people to revolt, or you can be sued by anyone, anytime on just your name on a piece of paper.