CFPB and NY AG Reach $4 Million Settlement with Debt Collectors

On May 23, 2022, the Consumer Financial Protection Bureau (CFPB) and the New York Attorney General (NY AG) announced that they have settled a case filed against six New York debt collection companies and affiliated individuals, resolving a one-and-a-half year enforcement action.  The original complaint ​was filed on September 20, 2020 in the U.S. District Court for the Western District of New York.

The CFPB and NY AG alleged that the companies and individuals committed deceptive acts and practices under the Consumer Financial Protection Act (CFPA), 12 U.S.C. § 5536(a)​, and violated Sections 804-807, and 809 of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692b-1692e, 1692g, and New York consumer protection and debt collection laws by making misrepresentations to consumers, making harassing phone calls to debtors and debtors’ friends and family, and by conducting coordinated “smear campaigns” on debtors’ social media.  They also alleged that the companies did not give any of the notices required by the FDCPA, even when asked for them by consumers.

The stipulated final judgment was filed in the district court on May 23, 2022, and was entered on May 25.  Pursuant to the stipulation, the companies and affiliated individuals are permanently banned from debt collection operations and face civil and monetary penalties of $4 million.  According to the stipulation, the CFPB and NY AG have agreed to split the $4 million penalty, with $2 million going to the CFPB’s victim relief fund as a civil money penalty, and $2 million going to the NY AG as damages owed to the State of New York. The agreement also provides that if Defendants fail to make timely payment, an additional $1 million in penalties will be due to the CFPB and NY AG.