CFPB, FTC, federal and state crackdown on corrupt debt collectors | Goodwin


On September 29, 2020, Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC), along with more than 50 federal and state law enforcement partners, announced a national law enforcement and awareness initiative designed to protect consumers from phantom debt collection and abusive practices and threatening debt collection.

“The CFPB is actively working to protect consumers from the illegal actions of debt collectors,” CFPB director Kathleen L. Kraninger said in a press release. “We will continue to monitor the financial market, as well as consumer complaints received, to ensure that we identify and take action against debt collectors who break the law. “

Nicknamed “Operation Corrupt Collector”, this recent crackdown includes the filing of more than 50 enforcement actions brought by CFPB, FTC, other federal agencies and 16 different states against debt collectors who allegedly engaged in illegal practices. States include Arizona, California, Colorado, Connecticut, Florida, Idaho, Illinois, Indiana, Massachusetts, New Mexico, North Carolina, North Dakota, New York, Ohio, South Carolina and Washington.

“Operation Corrupt Collector” includes a case filed by the CFPB and the New York Attorney General against five companies for their involvement in an alleged debt collection transaction in New York. In CFPB et al. v JPL Recovery Solutions, LLC, et al., # 1: 20-cv-01217 (WDNY), the CFPB and the New York Attorney General allege that, since at least 2015, the defendant debt collectors have used deception, harassment and other inappropriate methods to trick consumers into making payments to them in violation of the Fair Debt Collection Practices Act (FDCPA) and the Consumer Financial Protection Act (CFPA). The complaint seeks redress from the consumer, restitution of ill-gotten gains, civil monetary penalties and an appropriate injunction against the defendants

“Operation Corrupt Collector” also includes five FTC law enforcement actions, including two newly filed cases that allege phantom debt collection, a practice where companies attempt to collect debts they cannot legally collect. or that a consumer should not. For example, in FTC. v. National Landmark Logistics LLC, et al., No.0: 20-cv-02592-JMC (DSC), the FTC, seeking a permanent injunction and fair monetary relief, alleges the company and its operators have raised more than $ 12 million from consumers through illegal debt collection practices. The FTC alleges that the defendants used robocalls to leave misleading debt collection messages with consumers, with the defendants claiming consumers would face imminent legal action over those debts. Further, the FTC alleges that when consumers returned the calls, the defendants falsely claimed to be from a mediation or law firm, again threatening legal action and using the consumer’s personal information to convince consumers that these threats were real. In FTC c. Absolute Financial Services, LLC, et al., No.0: 20-cv-02596-JMC (DSC), the FTC is also seeking an injunction and monetary remedy against a company and its operators for allegedly collecting more than $ 5.2 million from consumers through illegal debt collection practices, including deceptive robocalls and robberies. threats of arrest to consumers if they do not pay the debt immediately. In both cases, the federal court issued temporary restraining orders against the defendants, suspending their operations, freezing their assets and placing them under the control of a receiver.

In addition to law enforcement action, the CFPB, FTC, and state and local consumer protection agencies are also releasing new information to help consumers know their debt collection rights, including lawsuits. they can take if they get a call trying to collect a debt they don’t recognize. For example, the CFPB directed consumers to tools to help them understand their rights with regard to debt collectors, found here. And, the FTC created a dashboard with information on reports received from consumers on unpaid debts and abusive and threatening collection practices.


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