A debt collection enterprise based in upstate New York and charged two years ago for lying to and harassing consumers would be required to exit the debt collection market, pay $4 million in civil money penalties (CMPs), and close up shop under a proposed stipulated judgment filed in federal court Monday by the federal consumer financial protection bureau and New York Attorney General (AG).
In an announcement, the Consumer Financial Protection Bureau (CFPB) said that it and the New York AG filed a proposed stipulated judgment in federal court to settle its case against a group of companies and their owners and managers, against which charges were filed in September 2020.
The CFPB said the defendant companies are JPL Recovery Solutions; Regency One Capital; ROC Asset Solutions, which does business as API Recovery Solutions and Northern Information Services; Check Security Associates, which does business as Warner Location Services, Pinnacle Location Services, and Orchard Payment Processing Systems; Keystone Recovery Group; and Blue Street Asset Partners (added to the complaint since the original was filed in 2020). The individual defendants are owners Christopher Di Re, Scott Croce, and Susan Croce, as well as Brian Koziel and Marc Gracie, who acted as managers of some or all of the companies, the CFPB said.
The bureau said the companies are interrelated collections businesses based out of a single location in Getzville, N.Y., and that together, they purchased defaulted consumer debt for pennies on the dollar. The debt came from high-interest personal loans, payday loans, credit cards, and other sources, the bureau said. The network then attempted to collect debts from about 293,000 consumers, it said, generating gross revenues of approximately $93 million between 2015 and 2020.
The CFPB and the New York AG allege that the network used deceptive and harassing methods, violating the Fair Debt Collection Practices Act (FDCPA) and the Consumer Financial Protection Act (CFPA). Specifically, the complaint alleges that the owners, managers, and companies used the following illegal tactics to collect debt:
- Falsely claimed arrest and imprisonment: The collection companies threatened people with arrest and imprisonment if they did not make payments. In fact, people are not subject to arrest or imprisonment for failure to pay debts.
- Lied about legal action: The companies falsely threatened people with legal action, including wage garnishment and property seizures. In reality, the network never sought or obtained any legal judgments.
- Inflated and misrepresented debt amounts owed: The defendants lied about debt amounts owed to convince people that paying the amounts they actually owed represented a substantial discount. To press people even further, collectors said it was the offers would only be available for a short period of time.
- Created “smear campaigns”: Using social media and other methods, the collectors pressured people to pay by contacting and disclosing the debts to their immediate and distant family members, grandparents, in-laws, ex-spouses, employers, work colleagues, landlords, Facebook friends, and other known associates. The network did this even after collectors were told by victims to stop contact. Victims described these tactics as “emotional terrorism.”
- Harassed people with repeated phone calls: The collectors repeatedly called people multiple times every day over periods lasting a month or longer. The network, in fact, instructed its collectors to let the person hang up on each call, so they can maintain a pretense in their call logs that they were disconnected, and then call back as soon as the next day. The collectors also used insulting and belittling language, and engaged in intimidating behavior when calling.
- Failed to provide legally mandated disclosures: The network did not provide people with statutorily-required notices, which detail their rights. When individuals asked for the notices, some collectors refused to provide them.
Of the $4 million in penalties to be assessed, $2 million would be paid to the CFPB (for the bureau’s victim relief fund) and $2 million to the New York AG. If the defendants fail to make timely payments, each CMP amount due would increase to $2.5 million, the bureau said.