The Consumer Financial Protection Bureau (CFPB) ordered debt collector Portfolio Recovery Associates to pay more than $24 million for alleged repeat offenses relating to debt collection practices and consumer reporting violations in conflict with a 2015 CFPB order as well as other violations of law.
According to the CFPB, Portfolio Recovery Associates violated the 2015 order by collecting on unsubstantiated debt, collecting on debt without providing required documentation and disclosures to consumers, suing or threatening legal action against consumers without offering or possessing required documentation, and suing to collect on debt outside the statute of limitations. Portfolio Recovery Associates also failed to properly investigate and resolve consumer disputes about the company’s credit reporting, the CFPB said.
“After getting caught red-handed in 2015, Portfolio Recovery Associates continued violating the law through intimidation, deception, and illegal debt collection tactics and lawsuits,” CFPB Director Rohit Chopra said. “CFPB orders are not suggestions, and companies cannot ignore them simply because they are large or dominant in the market.”
In the complaint filed in the U.S. District Court for the Eastern District of Virginia, the CFPB charged Portfolio Recovery Associates with violating numerous requirements of the 2015 order during the five-year period the order was in effect and engaging in deceptive conduct in violation of the Fair Debt Collection Practices Act and the Consumer Financial Protection Act, including:
- Making representations about unsubstantiated debts. Portfolio Recovery Associates allegedly made at least tens of thousands of representations about unsubstantiated, disputed debts, failing to review the required documentation to support the claim.
- Threatening consumers with potential legal actions and initiating debt collection lawsuits without offering or possessing required documentation. According to the bureau, Portfolio Recovery Associates’ lawyers sent millions of form letters to consumers notifying them of potential legal action without offering to provide all required documents. Portfolio Recovery Associates also initiated thousands of legal actions against consumers when it lacked proper documentation about the debt.
- Misrepresenting it would provide certain documents within 30 days. The form letter notifying consumers of potential legal action stated, upon receipt of a written request from the consumer, Portfolio Recovery Associates would provide within 30 days of request the proof of documentation mentioned in the letter. On numerous occasions, Portfolio Recovery Associates failed to timely provide these documents after receiving a consumer’s written request for them. This impeded consumers’ ability to determine whether a debt was truly owed and how they should respond to allegations of outstanding debts.
- Collecting on time-barred debt without making required disclosures. On numerous occasions, Portfolio Recovery Associates did not provide the required disclosures to consumers when collecting on debts beyond the statute of limitations. When the company purchased debt, it estimated the statute of limitations that governed the debt, and in some cases that date was later than the actual statute of limitations.
- Suing to collect on time-barred debt. Portfolio Recovery Associates initiated at least dozens of lawsuits for debt that was too old to legally enforce. In doing so, Portfolio Recovery Associates falsely represented those consumers had legally enforceable obligations to pay those debts when in fact they did not because the debt was outside the statute of limitations.
The CFPB also alleges Portfolio Recovery Associates committed numerous violations of the Fair Credit Reporting Act and its implementing Regulation V, which included failing to inform consumers about investigation outcomes, failing to timely resolve disputes, and conducting unreasonable investigations.
If the consent order is entered by the court, it will require Portfolio Recovery Associates to pay more than $12 million to consumers harmed by its illegal debt collection practices and an additional $12 million civil money penalty that would be deposited into the CFPB’s victims relief fund.