Have you been getting harassing calls on your cellphone regarding student loans?

If you are an Indiana resident contact my office if you are receiving harassing phone calls to your cell phone regarding student loans, or even other loans.  It doesn't matter whether these calls are coming from the loan originator or a later collection company.  Call us at 317-662-4529

Fake Payday Loan - Arrest Warrant Scam Resurfaces

I had a caller today report harassing emails claiming she was going to be arrested unless she paid a payday loan she didn't take out.  The calls including threats of jail, garnishment and use of the "n-word".  All of these are illegal debt collection tactics.  The reason these practices go on is that this particular breed of company doesn't care.  They don't intend to be around for law enforcement or law suits to catch up with them. They may be overseas with no United States presence at all.  

Because it is almost impossible to catch these companies and hold them accountable, it is important not to give them information or money.

Below is some information from the Washington Department of Financial Institutions.   http://www.dfi.wa.gov/consumer/alerts/cash-advance-group-payday-loan-debt-collection-scam

Cash Advance Group - Payday Loan Debt Collection ScamShare on facebookShare on twitterShare on emailShare on printMore Sharing Services

Date Posted: 
Friday, July 10, 2015
Updated: July 10, 2015 
Originally Posted: October 31, 2013
Also Doing Business As:

• Cash Advance

• US Cash Advance

• Cash Advance Inc

• and other entities using variations of the name “Cash Advance”

The Washington State Department of Financial Institutions has received reports of what appears to be a payday loan collection scam. Numerous consumers report that they have been contacted by phone and e-mail by entities claiming to collect debt owed to companies with “Cash Advance” in their names. The collection attempts often involve threats of lawsuits, asset seizure, and arrest. It appears that the consumers who were contacted do not actually owe money to Cash Advance.
Two consumers report that they received e-mails claiming that an arrest warrant had been issued because they had not paid Cash Advance Inc. or Cash Advance. One consumer received an e-mail from a man calling himself William C. Jones, who claimed to work at a Federal Trade Commission office. He threatened to disclose the debt to the consumer’s employer, garnish her wages, and file a law suit against her. Another consumer received a similar e-mail from a person calling himself Neal Johnson. A fake U.S. District Court arrest warrant was attached to both of these e-mails.
Several consumers also report receiving phone calls from entities attempting to collect debts owed to Cash Advance, Cash Advance Group, and US Cash Advance. The collection calls came from people who called themselves Brian Wilson, John Murphy, and Jim Spencer. Some calls also came from a person claiming to work for Peterson Law Group. In one case, the caller threatened that he could have an arrest warrant issued if the consumer did not immediately pay him with a credit card. In another case, the caller threatened to seize the consumer’s bank account and serve the consumer with legal papers at his workplace unless he paid the debt. Another consumer was threatened with arrest.
Other consumers report receiving threatening e-mails attempting to collect alleged debts owed to one of Cash Advance Inc.’s companies. The representatives identified themselves as Jason Marroitt and David Jones. The emails also list numerous companies that they claim are affiliated with Cash Advance Inc.
The following contact information is associated with these calls and e-mails:
951-223-6693 
443-403-2041 
202-751-2493 
202-241-0332 
402-318-7075 
206-494-9996 
210-272-9477 
916-350-4501
johnsonlaw5@aol.com 
neal.advocate@aol.com 
federaltradecommissionlawfirm@gmail.com 
ethanmccord@outlook.com 
Watson.cashadv.america@outlook.com 
vharris00120@gmail.com 
americafincen@gmail.com 
robertwilson@legislator.com
Addresses: 12850 W 331 Ste. 60, Alpamont, UT 84201 (address does not appear to exist) 
8901 S Wilton Place, Los Angeles, CA 90047
These entities are not licensed by the Washington State of Department of Financial Institutions as payday lenders or by the Washington State Department of Licensing as collection agencies.
Washington residents are advised that state law provides in RCW 31.45.105(1)(d) and (3) that a small loan made by an unlicensed entity to a person physically located in Washington is uncollectible and unenforceable in Washington State.
Verify Licenses
DFI strongly recommends that consumers deal only with those lenders that are properly licensed to conduct business. Consumers can determine whether lenders are properly licensed using the “Verify a License” feature on DFI’s website at www.dfi.wa.gov.
Report Fraud
If you are suspicious of unlicensed activity by a lender, report directly to your state regulator: find your state regulator.
If you feel you have been the victim of a loan scam please contact the Federal Trade Commission at 1-877-FTC-HELP (382-4357) or online at www.ftc.gov; or contact the Consumer Financial Protection Bureau (855) 411-CFPB or online atwww.consumerfinance.gov. Because the scammers have access to bank account information and social security numbers, victims should consider themselves victims of identity theft and take appropriate precautions. The Federal Trade Commission has information for victims of identity theft available online at www.ftc.gov.
If you feel you have been the victim of a loan scam involving the Internet please contact the Internet Crime Complaint Center online at www.ic3.gov.
If you feel you have been the victim of a loan scam and are concerned about your personal financial information, contact your banking institution, and the three major credit bureaus.

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Hyundai Recalls 570,000 Sonatas and Accents - Could other 4-Cylinder Hyundais be Affected?

In news that was completely overshadowed by Volkswagen 'fessing up about rigging its diesels to pass emissions test but to be far dirtier in real life, Hyundai announced last week that it was recalling 570,000 Sonata and Accent models.  This is somewhat more than the number of US-based cars affected by the Volkswagen fiasco. Moreover, as far as owners' impact is concerned, the problems with the Hyundai's are more expensive or are more dangerous.

Here's the Sonata Recall information

Vehicle Make Model Model Year(s)
HYUNDAI SONATA 2011-2012

Details

Manufacturer: Hyundai Motor America

SUMMARY:
Hyundai Motor America (Hyundai) is recalling certain model year 2011-2012 Sonata vehicles manufactured December 11, 2009, to April 12, 2012 at Hyundai Motor Manufacturing Alabama and equipped with either a 2.0 liter or 2.4 liter Gasoline Direct injection engine. In the affected vehicles, metallic debris may not have been fully removed during manufacturing of the engine crankshaft. If the debris was not completely removed, oil flow may be restricted through the connecting rod bearings, causing connecting rod damage. A worn connecting rod bearing will produce a metallic, cyclic knocking noise from the engine and possible engine failure.

CONSEQUENCE:
Engine failure would result in a vehicle stall, increasing the risk of a crash.

REMEDY:
Hyundai will notify owners, and dealers will inspect the vehicles and replace the engine assembly, as necessary, free of charge. Additionally, Hyundai Motor America will increase the warranty for the engine sub-assembly (short block) to 10 years/120,000 miles for both original and subsequent owners of 2011 and 2012 Sonatas manufactured at Hyundai Motor Manufacturing Alabama equipped with 2.0 liter and 2.4 liter Gasoline Direct injection engines. An interim notification will be mailed by November 2, 2015. A second notification will be mailed when parts are available. Owners may contact Hyundai customer service at 1-855-671-3059 or by visiting www.HyundaiUSA.com/Campaign132. Hyundai's number for this recall is 132.

NOTES:
Owners may also contact the National Highway Traffic Safety Administration Vehicle Safety Hotline at 1-888-327-4236 (TTY 1-800-424-9153), or go to www.safercar.gov.

In other words, Hyundai Sonatas with the most popular engines, the 4-cylinder engines from 2011 and 2012 model years may have a defectively machined crankshaft that may send metal pieces through the oil lines which could cause the engine to throw a rod or otherwise completely bite the dust.

This is not an arbitrary or potential problem. I have clients who suffered this exact problem with their 2011 Sonata, and Hyundai told them they were out of luck because the car had just passed 100,000 miles.

Based on just a couple hour's inquiry, I think that this recall and warranty extension will go past the Sonata and also include Genesis and Veloster models with the Turbo-4 cylinder.  It may be due to shavings but it may also be due to LSPI, low speed pre-ignition which can be a problem with a direct-injeccted engine that is not running perfectly.

Here's a youtube video posted by someone whose 2014 Veloster Turbo blew an engine.

<iframe width="560" height="315" src="https://www.youtube.com/embed/NuDB_tiIjHU" frameborder="0" allowfullscreen></iframe>

Here is the problem with the Accent, the brake lights might not come on when you hit the brakes, also tapping the brakes may not deactivate the cruise control.  I would call this a serious problem.

RECALL Subject : Brake Light Switch may not Function

Report Receipt Date: SEP 08, 2015
NHTSA Campaign Number: 15V566000
Component(s): EXTERIOR LIGHTING
Potential Number of Units Affected: 99,500
All Products Associated with this Recall

Vehicle Make Model Model Year(s)
HYUNDAI ACCENT 2009-2011

Details

Manufacturer: Hyundai Motor America

SUMMARY:
Hyundai Motor America (Hyundai) is recalling certain model year 2009-2011 Hyundai Accent vehicles manufactured March 1, 2009, to February 11, 2011. In the affected vehicles, the brake light switch may malfunction. A malfunctioning brake light switch may cause the brake lights to not illuminate when the brake pedal is depressed or may cause an inability to deactivate the cruise control by depressing the brake pedal. Additionally, a malfunctioning brake light switch may also prevent the shifter from being moved out of the PARK position.

CONSEQUENCE:
Failure to illuminate the brake lights during braking or the inability to disengage the cruise control could increase the risk of a crash.

REMEDY:
Hyundai will notify owners, and dealers will replace the brake switch, free of charge. The recall is expected to begin November 2, 2015. Owners may contact Hyundai's customer service at 1-855-671-3059 or by visiting www.HyundaiUSA.com/Campaign131. Hyundai's number for this recall is 131. This recall is an expansion of 13V-113.

NOTES:
Owners may also contact the National Highway Traffic Safety Administration Vehicle Safety Hotline at 1-888-327-4236 (TTY 1-800-424-9153), or go to www.safercar.gov.


When you have a serious problem with your vehicle that you suspect might be related to a weakness in the car's design or manufacturing, you should do an online search to see if other owners are reporting the same problem.  Then, you should put your car's make, model, and year in the google box along with the phrase "technical service bulletins" or "TSBs". Also, put in the make, model year of your car and "recalls".  These three searches will tell you first if there is a common problem with the car and whether dealers have been put on alert to look for the problem or given specific instructions on how to handle it.  These technical service bulletins or TSBs can in some cases be similar to a "secret warranty" where the manufacturer will fix a problem that technically isn't covered by the manufacturer's warranty.

If you think the dealer is wasting your time or trying to stall because they don't know what to do about a problem, then you are probably right.  If your gut tells you you should see a lawyer, then you are probably right as well.  In most areas you can find an consumer lawyer experienced in automobile issues by going to the NACA.net website.  Most consumer lawyers will at least talk to you on the phone or by email the first time for free.

AS A SEPARATE ISSUE, IF YOU HAVE HAD A HYUNDAI VEHICLE BOUGHT BACK UNDER A STATE LEMON LAW IN THE PAST 4 YEARS, I WOULD LIKE TO TALK TO YOU.  IF YOU HAVE BOUGHT A HYUNDAI IN THE PAST 4 YEARS THAT EITHER HAS A LEMON LAW BUYBACK TITLE OR SHOULD HAVE HAD A LEMON LAW BUYBACK TITLE, I WOULD LIKE TO TALK WITH YOU.  Please call 317-662-4529.

The Area Code 713 IRS Scam

You may get a phone call from an area code 713 #.  The caller may say that he or she is from the IRS and say that you are being sued, and need to give them a money order for $4,900 to stop the law suit.  This is a complete scam. It is important that you don't give them any money.

Volkswagen AdBlue Heater Class Action?

Separate from the issue relating to the falsified emissions test results that are affecting up to 11 million Volkswagen vehicles is a problem that has been reported by many Volkswagen Passat TDI owners.  The key to the emission-system on late model Volkswagen turbodiesel engines is liquid emissions-treatment system that uses a separate tank of urea-based diesel emissions fluid (DEF) which Volkswagen calls Adblue.  The Adblue solution is in a separate tank, and that fluid tank is heated for use during cold weather. Therein lies the problem, There have been reports of the heater element failing outside of the standard 36 month warranty but well within the 100,000 mile emissions warranty.  Volkswagen is refusing to repair these vehicles under the emissions warranty. Owners are being quoted from $900 to $3,000 plus for the repair of what we believe should be covered by the emissions warranty.  We have our first client on this issue and are evaluating the matter for potential class action treatment.  If you have a Volkswagen with premature Adblue heater failure, please contact our office.  If we pursue this as a group case, it will likely be with the participation of other consumer attorneys from different parts of the country.

On the Volkswagen Diesel Emissions Scam

This week, Volkswagen admitted that up to 11 million of its TDi diesel-equipped vehicles had been intentionally rigged to pass EPA inspection but emit far more noxious exhaust in real world driving.  Owners of both affected and not-affected Volkswagen are wondering where this puts them.  If you are an Indiana resident with a 2009 or later diesel-equipped Volkswagen, Porsche, or Audi vehicle, and you feel like the manufacturer is giving you the run-around, feel free to contact me. I think it is likely that over the long term, the manufacturer will offer some cash compensation and a service fix, but that will take some time. If you feel like you need to sell your vehicle for personal reasons in the short term, but you feel the value has tanked due to this issue, you may need some legal assistance.  It might be possible to force a manufacturer buy-back of your vehicle.  This is still a matter of debate among those of us who are consumer protection attorneys.

What's the Story with LSF9 Master Participation Trust?

I have a foreclosure client who has a loan that was bought by LSF9 Master Participation Trust.  This is a weird case in a lot of ways, but when I Looked for information on LSF9 Master Participation Trust, I found from a Google search that it seems that a lot of problem loans from different servicers got swallowed up in this trust (which is serviced by Caliber Home Loans, Inc. That's not necessarily bad, as long as whoever buys an interest in the trust knows the true status of the loans and as long as the new servicer competently handles the loans.

Here's a blurb that I found on the web:

Lone Star Funds Lone Star Funds is a private equity firm that “seeks investment opportunities in developed markets that have suffered an economic and/or banking crisis.”24 The firm submitted winning bids for every pool offered in the June 2014 DASP auction, with a weighted average bid of 77.6 percent of the properties’ value.25 The 2014 fund that invested in the DASP loans, Lone Star Fund IX, has an investment period of 40 months.26 In July, Lone Star bought $500 million in nonperforming residential mortgages from JPMorgan Chase & Co.27 Lone Star Funds owns Caliber Home Loans, a full-service mortgage company and special servicer28 led by Joe Anderson, former Senior Managing Director at Countrywide Financial Corporation, the poster-child of the predatory, discriminatory29 subprime mortgage boom and overheated, destructive mortgage-backed securities markets that fueled the current housing crisis.30 Standard and Poor’s Ratings Services (S&P) has ranked Caliber Homes as Above Average as a US residential special and subprime mortgage loan servicer.31

source: http://homesforall.org/wp-content/uploads/2014/09/HUD.DASP_.RTC_.v15.pdf

So LSF9 Master Participation Trust is a pool of distressed mortgages put together by Lone Star funds.  The mover and shaker behind Lone Star Funds is a billionaire named John Grayken.  LSF9 ws the high bidder in an auction of  $3.8 billion in loans that the FHA had insured.  According to Bloomberg News:

June 20 (Bloomberg) -- Lone Star Funds, the private-equity firm founded by billionaire John Grayken, submitted winning bids for $3.9 billion of soured home loans sold this month by the Department of Housing and Urban Development.
It was the first time that a single bidder won each of the pools of loans offered in such a sale of debt previously insured by the Federal Housing Administration, HUD said today in an e-mailed statement. Dallas-based Lone Star’s bids on the 16 pools auctioned on June 11 averaged 77.6 percent of the estimated current prices of the homes and 65.8 percent of the unpaid loan balances, HUD said.

Source: http://www.bloomberg.com/news/articles/2014-06-20/lone-star-wins-3-8-billion-of-bad-fha-loans-at-auction

What this means is that if LSF9 bought your mortgage, they likely only paid $65.8% of the loan balance which was 77.6% of the value of the house.   (You see, these loans were upside down, but they aren't based on what Loan Star Funds paid.  In other words, Loan Star Funds and its subsidiary has room to cut you a deal on a modification and still make money.  Will they?  That's going to be up to them.   (This also means that the FHA may has paid the original owner a big chunk of money that came out of your mortgage insurance.  Assuming the new owner doesn't discount the principal of the loan, the benefits of this write-down go to the rich investors behind the Lone Star Funds.  Not only that but if you work out a deal to get the loan caught up at the previous rate and terms, Lone Star gets a windfall. Let's say you had a loan at 4% APR, if Lone Star only paid 65.8% of the principal, that's an effective rate of over 6%. If you had an 8% subprime loan, that's an internal rate of return of over 12% for Lone Star.  Elizabeth Warren is right, the game is rigged.)

A large portion of the loans in LSF9 appear to be from Chase, bought in a $500 million bulk deal.  

My client's loan was a Citimortgage loan.  Based upon the information that I've gathered, it appears Citimortgage  sold its interest to LSF9 Master Participation Trust while the loan was subject to a foreclosure lawsuit originated by Citimortgage. Instead of discontinuing the lawsuit, or substitutiong  LSF9 Master Trust as a plaintiff,  Citimortgage has continued the lawsuit under the representation that it is the owner of the loan without notifying the court that the ownership has changed.  

If you are in the midst of a foreclosure proceeding and your servicer gets changed to Caliber Home Loans, it may mean that your loan has been sold to a Lone Star affiliated trust.  If that happens your foreclosure case should not go through under the previously filed paperwork.  At the very least the change in ownership should be disclosed, and it may trigger another opportunity to modify your loan.  It also might be an unfair debt collection practice by the firm that is filing the foreclosure suit.  If you have this happen to you, contact me or find a local NACA consumer attorney near you at www.NACA.net.  

UPDATE 3/14/2017

Since I wrote this blog post a year and a half ago, it has been by far my most popular post, with over 14,000 hits. I have also gotten emails from lots of frustrated people trying to deal with LSF-9.  Most of these have either been people who are either trying to buy LSF9 properties or who are facing foreclosure on an LSF-9 mortgage.  I have this to say about each category:

IF YOU ARE FACING FORECLOSURE ON A MORTGAGE OWNED BY LSF9 Master Participation Trust, or maybe LSF8 or LSF10 or whatever, get advice from an experienced consumer lawyer IN YOUR AREA.  To find one in your area use the National Association of Consumer Advocates' Find an Attorney page.  I can't represent you if you are not a resident of Indiana.

 IF YOU ARE TRYING TO BUY A PROPERTY OWNED BY LSF-9 AND CAN'T FIND ANYBODY TO CONTACT, good luck, I can't help you.  You can write to Caliber. You can write to the lawyer handling the foreclosure case.   You can write to Lone Star Funds, the parent company, at the address below which I took from their website.

• 
  

• Lone Star Global Acquisitions, Ltd.

  • Lone Star North America Acquisitions, LLC
  2711 North Haskell AvenueSuite 1700 (and Suite 2150)Dallas, Texas 75204USA
  214-754-8300

Looking for a Consumer In the Tri-State Area? - Here are Three Steves

If you are looking for a consumer attorney in Ohio, Kentucky or Indiana, you can have not just any consumer attoney, you can have a consumer attorney named Steve.  Really can you do any better than that?  I had a great lunch with Steve Felson (Cincinnati area) and Steve Shane (Northern Kentucky).  Here's a picture:  (Left to right, Felson, Hofer, Shane)

CFPB LEVIES MILLIONS OF DOLLARS IN FINES ON #1 AND #2 DEBT BUYERS

In what might be a foretaste of things to come, the Consumer Financial Protection Bureau  (CFPB) once again reminded bad guys that there is a new sheriff in town by levying fines totaling mtens of millions of dollars against the #1 and #2 bad debt buying debt collectors.  The number one collector, Encore Capital Group (which sues most often in my neck of the woods under Midland Credit Management) and number two collector, Portfolio Recovery Associates were found guilty of a laundry-list of practices.  So I can get back to real work, I"m reprinting the entire press release below.
The tragedy is that even though the CFPB has found that the documentation that Midland provides in court is unreliable, far too often courts take the documents at face value. The net result is poor people are driven even farther into poverty.

It is likely that the CFPB will bring enforcement actions on other big collectors soon.  Thanks to the Dodd-Frank Act, the CFPB has the authority not just to investigate complaints, but to also audit and inspect the records of debt-buyers.  I had heard rumors floating around that the CFPB had installed full-time monitors in the offices of many of  the top debt collection firms.  That's the kind of government work that I don't mind paying taxes for.

The CFPB Press Release is reprinted below. The original can be found at http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-the-two-largest-debt-buyers-for-using-deceptive-tactics-to-collect-bad-debts/?utm_source=http%3A%2F%2Fwww.consumerfinance.gov&utm_medium=facebook
-----------------------

Sep 9 2015

CFPB Takes Action Against the Two Largest Debt Buyers for Using Deceptive Tactics to Collect Bad Debts

Encore and Portfolio Recovery Associates Must Refund Millions of Dollars and Overhaul Debt Collection and Litigation Practices
WASHINGTON, 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 Debts

Encore 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 Practices

Encore 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 Action

Pursuant 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 penalties:
  
  • Encore must pay a penalty of $10 million to the CFPB’s Civil Penalty Fund.
    
  • Portfolio Recovery Associates must pay a penalty of $8 million to the CFPB’s Civil Penalty Fund.

The Encore consent order can be found at: http://files.consumerfinance.gov/f/201509_cfpb_consent-order-encore-capital-group.pdf
The Portfolio Recovery Associates consent order can be found at: http://files.consumerfinance.gov/f/201509_cfpb_consent-order-portfolio-recovery-associates-llc.pdf

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The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit consumerfinance.gov.