Alleged harassment of thousands of consumers and claims of falsely threatening them with legal action has earned an Anaheim, Calif., firm and its owner a permanent ban from the debt collection business, as well as damages and penalties, the agency said Tuesday.
The Consumer Financial Protection Bureau (CFPB) said it found that Anaheim-based Yorba Capital Management, LLD, and its former owner – Daniel Portilla, Jr. – violated the Consumer Financial Protection Act of 2010 (CFPA) and that Yorba violated the Fair Debt Collection Practices Act (FDCPA).
The agency, in its consent order, said Yorba and Portilla, from January 2017 until at least April 2020, attempted to collect debt through written and oral communications with consumers, including by mailing letters to consumers titled “Litigation Notice,” which contained both a phony “case no.” and a case caption similar to that which would be found on a court filing.
The notice also contained statements threatening to file suit against a consumer if that individual did not pay Yorba the debt amount indicated in the letter. “You are hereby notified that a recommendation to file a lawsuit to collect this debt may be the next step resulting in a judgment entered against you,” the letter stated, CFPB contended. The bureau indicated the threats were bogus.
“Despite Respondents’ representations in the Litigation Notice, Respondents did not employ law firms or lawyers, and did not file lawsuits against consumers to enforce outstanding debt,” CFPB wrote. “Because Respondents did not file lawsuits against consumers to collect debt, Respondents also did not obtain any judgments or collect on any such judgments, contrary to the implications in the Litigation Notice.”
In addition to a permanent ban on being in the debt collection business, Yorba and Portilla were ordered to pay damages of $860,000. However: that payment was suspended in the consent order, given that the firm and its former owner offered proof of their inability to pay the judgment. Damages remain suspended only if they meet other provisions of the order, which allow a pay-down over time of the amount owed.
In this method, if Yorba and Portilla receive, directly or indirectly, any reimbursement or indemnification from any source, including but not limited to payment made under any insurance policy, or if they secure a tax deduction or tax credit with regard to any federal, state, or local tax, the must Immediately inform CFPB – in writing – and within 10 days of receiving the funds or monetary benefit, transfer to the bureau the full amount of such funds or monetary benefit to the agency (or its agent). After the bureau receives the payment, the amount of the suspended judgment is reduced by the amount of the payment, the order states.