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Bureau teams with New York in debt-collection suit

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Banking
Friday, September 25, 2020

In a joint enforcement action, the Consumer Financial Protection Bureau (CFPB) and New York Attorney General filed suit against a group of debt-collection companies for alleged deceptive and harassing practices.

The complaint alleges that the violations stemmed from 2015 and were used to induce consumers to make payments to the debt-collection companies.

The company defendants are: JPL Recovery Solutions, LLC; Regency One Capital LLC; ROC Asset Solutions LLC, which does business as API Recovery Solutions; Check Security Associates LLC, which does business as Warner Location Services and Orchard Payment Processing Systems; and Keystone Recovery Group. 

Individual defendants cited in the complaint are Christopher Di Re and Scott Croce, who have held ownership interests in some or all of the defendant companies, and Brian Koziel and Marc Gracie, who are members of Keystone Recovery Group, and have acted as managers of some or all of the defendant companies. 

“This lawsuit should send a clear message to debt collectors who violate the law that we will take action to stop such practices and protect consumers,” CFPB Director Kathy Kraninger said in a release announcing the action. “The bureau is committed to holding these companies and individuals accountable for threatening, harassing, and deceiving consumers. I thank Attorney General (Letitia) James and her staff for working with us on this matter.”

The complaint alleges that defendants violated several provisions of the Fair Debt Collection Practices Act (FDCPA) by threatening consumers with arrest or legal action the firms had no intention of taking or could not legally take; threatening to contact consumers’ employers to disclose the debt; claiming consumers owed more debt than they did in order to convince them to pay the amount they owed; impermissibly contacting consumers’ friends, family, and workplace to disclose the existence of a consumer’s debt or to shame or humiliate them; harassing consumers by using intimidating, belittling, or menacing language and repeatedly and excessively phoning consumers; and failing to provide legally required notices informing consumers of their right to know how much they owed and of their ability to dispute the amount or existence of the purported debt.

“We will not sit idly by as debt collectors extort payment from consumers by using illegal, deceitful tactics,” James stated. “Collecting on money that consumers do not owe – and doing so using false threats of arrest and other unscrupulous means – is inexcusable and unlawful. My office is committed to defending the rights of New Yorkers, and I thank the CFPB for their partnership in this case.”

The complaint further alleges that defendants engaged in deceptive acts or practices in violation of the Consumer Financial Protection Act (CFPA) by misrepresenting that they would have the consumer arrested, that they would file lawsuits they did not intend to file, that they would garnish the wages of the consumer, and that the consumer owed more than they actually did.

The complaint also alleges that the violations of the FDCPA constituted violations of the CFPA and that the individual defendants substantially assisted the firms in their deceptive conduct.

The NYAG additionally alleges violations of New York law based on the same conduct.

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