After the 2008 financial crisis, Congress created the Consumer Financial Protection Bureau, as authorized by the Dodd–Frank Consumer Protection Act, as the only federal agency with the sole mission of protecting consumers in the financial marketplace.
The Consumer Financial Protection Bureau (CFPB) is an independent agency of the United States government responsible for consumer protection Its jurisdiction includes banks and debt buyers who are engaging in unfair, deceptive, and abusive collection practices.
Since the Consumer Financial Protection Bureau (Bureau) commenced operations, it has brought more than 25 debt collection cases against first and third-party collectors alleging unfair, deceptive, and abusive debt collection acts and practices. In these cases, the CFPB has ordered over $100 million in civil penalties, over $300 million in restitution to consumers, and billions of dollars in debt relief to consumers.
On September 9, 2015, the CFPB found that Portfolio Recovery Associates , LLC and its related subsidiaries, were involved in unlawful, unfair, deceptive and abusive collection practices and fined Midland Funding, LLC $ 8 million dollars.
In addition, the CFPB required Portfolio Recovery to establish accounts for future consumer claims of $ 40 million dollars.
Portfolio Recovery, LLC consented to this finding.
Specifically, the CFPB found that Portfolio Recovery, LLC (PRA)
“PRA is aware that significant inaccuracies may exist in the Sale Files it purchases, including that some Debts’ balances were no reduced by a consumer’s subsequent payments.”
“Language in PRA’s purchase agreements puts PRA on notice that information in the Sale File might be inaccurate, incomplete, or otherwise unreliable”.
“The purchase agreements stated that PRA was purchasing the loans based on PRA’s independent examination, study, inspection and knowledge of the loans. However, PRA did not routinely check the account information in the Sales Files it purchased against the original creditor’s records before contacting consumers, even when it knew or should have known the Sales File contained unreliable information.”
“PRA did not monitor its portfolios of debts for accuracy. PRA relied primarily on consumer disputes to determine whether a portfolio was unreliable and would assume its accuracy unless consumers came forward with evidence of problems in material numbers.”
“PRA did not alter its collection practices when collecting on Portfolios that it knew or should have known contained unreliable information.”
“PRA did not require its Law Firms to review account-level documents prior to filing suit. PRA prohibited them from contacting the original creditor or debt sellers directly to request such documents. PRA does not review pleadings before outside counsel files them”.
“In Affidavits used to support PRA Debt Collection Lawsuits, PRA’s affiliates on many occasions represent that they have personal knowledge of original creditors’ account-level documentation corroborating consumer debts when in fact they did not.”
“In numerous instances, affiliates made the representations discussed in the preceding paragraph after merely reviewing a computer screen containing the scant information produced by Sellers in data files and not after a review of any account level documents such as account applications, terms and conditions of contracts, pay histories, monthly credit card statements, or charge slips.”
“PRA’s affiliates on numerous occasions represented that the terms and conditions documents attached to the Affidavit specifically applied to the Consumer’s Debt. “In fact, on numerous instances, the attached terms and conditions were often generic and did not necessarily apply to the Consumer’s debt.”
“In numerous instances, PRA through its affiliates represented directly or indirectly, expressly or by implication that they have knowledge of the content of an account agreement.”
“In fact, in certain instances the affiliates could not have such knowledge because in the same filings, PRA represented it was unable to locate the agreement the affiliates would have to review to gain that knowledge”.
You can find the entire Order from the CFPB here →