Portfolio Recovery Associates, one of the nation’s top debt collectors, has agreed to pay clients $12 million and the Consumer Financial Protection Bureau a $12 million fine to settle charges of illegal collection methods.
The CFPB settled a slew of allegations against the Norfolk, Virginia-based corporation that was first made in a 2015 enforcement order, according to a filing in the U.S. On Thursday, the Eastern District of Virginia District Court heard the case.
Debt Collection Giant Accused Of Fraud
Portfolio Recovery Associates is being accused of two main offenses. The CFPB’s major finding includes a 2015 case in which the corporation was shown to be participating in improper collecting methods.
The CFPB ordered the agency to pay over $27 million in restitution to consumers in September 2015 for deceptive techniques and misleading conduct. The following actions were prohibited under the order:
- Buying and selling debt
- Making deceptive or untrue statements
- Debt collection without a legal basis
- Falsifying affidavits
- Collecting debt after the statute of limitations has expired
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CFPB Alleges Various Violations
During the five-year period, the CFPB has charged Portfolio Recovery Associated with a number of 2015 order violations.
Failure to back up claims
The CFPB accuses the agency of issuing at least tens of thousands of baseless, contested debt representations without analyzing the necessary documentation to back up these claims.
Possibility of legal action
According to the CFPB press release, Portfolio Recovery Associates’ lawyers sent millions of letters to clients informing them of prospective legal action without providing the necessary evidence.
Misrepresenting the timeline for verification of documentation
Portfolio Recovery Associates indicated in the letter informing clients of the possibility of legal action that upon the consumers’ request, it will give proof of paperwork within 30 days.
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