In an unusual proposal, five debt collectors will settle a complaint with the federal consumer financial protection bureau by agreeing to be banned from the industry and pay fines and redress of $60 million. But two of the five will only pay as little as $11,000 of the total.
In a Thursday release, the Consumer Financial Protection Bureau (CFPB) said it had filed proposed settlements with debt collectors Douglas MacKinnon, Northern Resolution Group, LLC, Enhanced Acquisitions, LLC, Delray Capital, LLC, and Mark Gray – all based in Buffalo, N.Y. The bureau said the debt collectors conducted business together.
Under the proposal, MacKinnon, Northern Resolution Group, and Enhanced Acquisitions will be banned from the industry and must pay $60 million in fines and redress. Delray Capital and Gray will be banned from the industry, CFPB said, and a judgment for civil money penalties and redress will be entered against them.
However: Full payment of fines and redress for Delray Capital and Gray (of redress of $4 million, a judgment for civil money penalties of $1 million to the CFPB, and a judgment for civil money penalties of $1 million to the New York Attorney General) would be suspended, the CFPB said, “subject to those defendants paying a $1 civil money penalty to the Bureau and $10,000 for consumer redress.”
According to a proposed stipulated final judgment and order submitted to federal court by the CFPB and New York attorney general, redress and CMPs for Delray Capital and Gray were suspended after the two defendants agreed to turn over financial statements and supporting documents about their operations to federal and state authorities.
If the organizations fail to do that, according to the proposal, they will face instead paying the full monetary penalties of redress for $4 million and CMPs for $2 million.
Meanwhile, the proposed settlement requires MacKinnon, Northern Resolution Group, and Enhanced Acquisitions to pay $40 million in redress to consumers and a $10 million civil money penalty to both the bureau and New York, for a total penalty of $20 million.
The proposal stems from a 2016 complaint brought by the CFPB and the New York attorney general. CFPB said the complaint alleged that since at least 2009, the companies together purchased millions of dollars’ worth of consumer debt, inflated those debts, and relied on illegal tactics to extract as much money as possible from consumers for their debts.
The bureau charged that MacKinnon also set up a network of at least 60 additional debt collection firms to collect on the debt owned or placed by Northern Resolution Group, Enhanced Acquisitions, and Delray Capital.
Both the CFPB and the New York attorney general alleged that MacKinnon, Gray, and their network of debt collection companies misrepresented to consumers that they owed sums they did not owe, were not obligated to pay, or that the companies did not have a legal right to collect; falsely threatened consumers with legal action that the collectors had no intention of taking; and impersonated law enforcement officials, government agencies, and court officers.