CFPB and New York Attorney General Shut Down Debt Collection Network

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Washington D.C. – The Consumer Financial Protection Bureau (CFPB), in partnership with the New York Attorney General, filed a proposed stipulated judgment in federal court to resolve its case against a debt collection company and its owners and managers. The ruling would order all participants in the scheme, based in upstate New York, to exit the debt collection market after their history of deception and harassment. His debt collection companies would also be shut down and forced to pay a total of $4 million in fines.

“It is illegal for debt collectors to organize smear campaigns using social media to extort consumers into paying,” said CFPB Director Chopra. “Our action with the New York Attorney General prohibits the ringleaders of this industry operation from stopping further misconduct.”

“This debt collection operation used illegal and deceptive tactics to take advantage of consumers, and now they are paying the price for the damage they caused,” said Attorney General Letitia James. “Predatory debt collectors make their profits by targeting hard-working consumers and then illegally put them deeper into debt. These debt collectors used harassing calls and false threats to force the consumer to pay, not only is it illegal, it is also downright embarrassing. Today’s action should send a strong message to debt collectors across the country that we will not hesitate to use the full force of the law to hold them accountable if they harm consumers.”

The companies sued are JPL Recovery Solutions; Regency One Capital; ROC Asset Solutions, doing business as API Recovery Solutions and Northern Information Services; Check Security Associates, doing business as Warner Location Services, Pinnacle Location Services and Orchard Payment Processing Systems; Keystone Recovery Group; and Blue Street Asset Partners. The individual defendants are owners Christopher Di Re, Scott Croce, and Susan Croce, as well as Brian Koziel and Marc Gracie, who acted as managers of some or all of the companies.

The companies are interrelated collection businesses based out of a single location in Getzville, New York. Together, they bought delinquent consumer debt for pennies on the dollar. The debt came from high-interest personal loans, payday loans, credit cards and other sources. The network then attempted to collect on the debts of around 293,000 consumers, generating gross revenue of roughly $93 million between 2015 and 2020.

The CFPB and the New York Attorney General allege that the network used deceptive and harassing methods, violating the Fair Debt Collection Practices Act and the Consumer Financial Protection Act. Specifically, the complaint alleges that the owners, managers, and businesses used the following illegal tactics to collect debts:

  • Falsely Claimed Arrest and Imprisonment: Collection companies threatened people with arrest and jail time if they did not make payments. In fact, people are not subject to arrest or imprisonment for non-payment of debts.
  • Lied about legal action: The companies falsely threatened people with legal action, including wage garnishment and property seizure. In reality, the network never sought or obtained court rulings.
  • Inflated and misrepresented debt amounts owed: The defendants lied about the amounts owed in order to convince people that paying the amounts they really owed represented a substantial discount. To put more pressure on people, collectors said the deals would only be available for a short period of time.
  • Created “smear campaigns”: Using social media and other methods, collectors pressured people to pay by contacting and disclosing the debts to their immediate and extended family members, grandparents, in-laws, ex-spouses, employers, co-workers, landlords, Facebook friends and other acquaintances. . associates. The network did this even after victims told collectors to stop contact. Victims described these tactics as “emotional terrorism.”
  • People harassed with repeated phone calls: The collectors repeatedly called people several times a day for periods lasting a month or more. The network, in fact, instructed its billers to allow the caller to hang up every call, so they can keep the pretense in their call logs that they were disconnected, and then call back as soon as the next day. The collectors also used insulting and demeaning language and engaged in intimidating behavior when calling.
  • You did not provide legally required disclosures: The network did not provide people with notices required by law, detailing their rights. When people requested the notices, some collectors refused to provide them.

Compliance Action

Under the Dodd-Frank Act, the CFPB has the authority to take action against institutions or individuals who engage in unfair, deceptive, or abusive acts or practices. The CFPB also has authority over debt collection practices under the Fair Debt Collection Practices Act. The stipulated judgment proposal filed today, if ordered, would require companies, as well as their owners and senior managers, to exit the debt collection market. The defendants must also pay a $2 million fine to the CFPB, which will be deposited into the CFPB’s victim relief fund, and a $2 million fine to the New York Attorney General. However, if the defendants do not make the payments on time, the amount of each penalty owed would increase to $2.5 million.

Today’s order follows the CFPB and the New York Attorney General lawsuit in September 2020.

Read today’s proposed Stipulated Judgment and Order.

Consumers can file complaints about debt collection activities, or financial products or services, by visiting the CFPB website or by calling (855) 411-CFPB (2372).

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The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information visit consumerfinance.gov.

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