Enforcement Actions And Judgments Against Debt Buyers, Debt Sellers, and Debt Collectors
This page lists in alphabetical order the major enforcement actions and notable private litigation against the largest debt buyers, debt sellers and debt collectors in the U.S, along with narratives from the CFPB’s consumer complaints database. I try to keep it current. If you believe I am missing anything that ought to be listed here, please contact me. For information about Peter Holland and The Holland Law firm, click here.
- Asta Funding
- Bank of America
- Chase Bank
- Frederick J Hanna Associates
- Midland Funding
- Portfolio Recovery Associates
Palisades Acquisitions XVI LLC (and similarly named companies) and Palisades Collections, LLC are subsidiaries of Asta Funding, a publicly traded company.
4/15/2015 – New York A-G action: Asta filed suits past the statute of limitations and obtained judgment in New York. Asta was required to vacate $1.7 million in judgments and pay $100,000 in fines.
Bank of America, N.A. / FIA Card Services
Bank of America is a national bank, subject to OCC regulation. BoA services its credit card accounts through an affiliate – FIA Card Services.
5/29/2015: OCC Consent Order: BoA was fined $30 million by the Office of the Comptroller of the Currency. The OCC found that BoA violated the Servicemembers Civil Relief Act and filed affidavits executed by its employees which claimed to be made on personal knowledge, or on a review of books and records, when they were not based on any such knowledge or review.
4/9/2014: CFPB Consent Order: The CFPB found that BoA had engage in deceptive marketing of credit card add-on products. BoA was ordered to pay $727 million in consumer relief by the CFPB. . The OCC fined BoA $25 million for the same actions.
9/2013: Private Lawsuit: BoA paid $32 million to settle a class action alleging that it violated the Telephone Consumer Protection Act by making autodialed and pre-recorded debt collection calls and texts to cell phones.
CACH, LLC is owned by SquareTwo Financial, an investment firm. It is said to operate a “franchise” business model, in which CACH itself, while owning the debts, does none of the actual collection work, leaving that to local affiliates, either collection firms or attorneys. CACH is sometimes also identified as CACV, or by the former name of its parent company: Collect America. Perhaps due to this structure, it is unclear how many CFPB consumer complaints exist against CACH-related entities.
An unusually large number of CACH debt-buying agreements are available: 2007, 2009, April 2010, April 2010, September 2010, October 2010, May 2011, August 2011, March 2013, April 2013, May 2013, June 2013. Most are between CACH and BoA’s affiliate, FIA Card Services.
6/23/2011: Private Lawsuit: Maine’s Supreme Judicial Court found that CACH was unable to collect a debt where the original contract had been destroyed and the amount and existence of the debt were “supported only by assertion[s]” by a Bank of America official and CACH’s own employees.
3/4/2011: Private Lawsuit: A $250,000 punitive damages jury verdict against a Collect America affiliated law firm was upheld on appeal. The firm had sued on statute barred debt after Collect America incorrectly told them that the statute of limitation had been tolled due to a payment by the consumer.
10/15/2008: Nevada A-G action: A law firm working on behalf of CACH was ordered to cease and desist from collecting debts in Nevada for failure to be licensed, either to collect debts or practice law, within the state.
2/25/2002: South Carolina State Bar: an attorney operating a “Collect America” franchise – the Zenner Law Firm, was publicly reprimanded by the South Carolina Bar for misconduct by his debt collector employees.
Cavalry appears to be a complex web of related entities. Cavalry Portfolio Services, LLC appears to be the servicer of accounts for other Cavalry entitles, typically Cavalry Special Purpose Vehicles (SPVs) followed by a number. A 2003 servicing agreement between Portfolio Services and SPV I is available. Cavalry Investments in the parent company of the group. As of 6/2/2015 there were 490 CFPB consumer complaints against Cavalry.
10/5/2015: Colorado A-G action: Cavalry fined $17,385 for violation for state FDCPA.
3/31/2015: Arizona Department of Financial Institutions action: Cavalry was fined $175,000 for failure to respond to consumer requests for validation of debts Cavalry sought to collect.
9/9/2011: Purchase Agreement: Cavalry purchased a portfolio of credit card debt from FIA Card Services (an affilicate of BoA). The purchase agreement contained various disclaimers, however key disclaimers in this document appear to be redacted.
6/2010: West Virginia A-G action; Cavalry was sued for collecting debts in the state without a license.
10/29/2008: Purchase Agreement: Cavalry purchased a portfolio of credit card debt from FIA Card Services (an affiliate of BoA). The purchase and sale agreement disclaimed representations as to the accuracy of any information provided, including balances, and as to compliance of the loans sold with federal or state law.
06/07/2002: Purchase Agreement: Cavalry purchased a portfolio of debt from Midfirst Bank. The purchase agreement disclaimed representations as to the accuracy of most information and documentation.
11/2/2015 – California Attorney General action: Chase stipulated to judgment in a suit alleging that it violated SCRA, state FDCPA and other California laws, agreeing to $50 million in restitution and an additional $50 million in penalties and other payments to California.
7/8/2015 – National action: 47 Attorneys-General, the CFPB and OCC joined in a settlement with Chase. Chase to pay $50 million in refunds, $60 million in federal penalties and $107 million to the states, cease collecting on 528,000 accounts and reforms its debt-selling practices, in particular cease robo-signing, prohibit debt re-sale and cease selling inadequately documented accounts
March, 2015 – U.S. Trustee Program Settlement: Chase allegedly filed inaccurate notices and statements regarding mortgages in Bankruptcy cases. Chase paid more than $50 million.
December, 2013 – Mississippi Attorney General action: Chase was sued for “egregious” debt collection conduct, including robo-signing documents and inadequate record-keeping.
November, 2013 – National Settlement: Chase agreed to pay $13 billion to settle allegations related to its sale of mortgage backed securities prior to the Financial Crisis.
September, 2013 – OCC Consent Order: the OCC found that Chase produced affidavits that were improperly notarized, falsely claimed to be based on personal knowledge, or which contained financial errors in favor of Chase. The OCC imposed additional compliance measures on Chase.
September, 2013 – CFPB Consent Order: Chase was ordered to refund $309 million to 2.1 million consumers to whom it had charged illegal fees.
December, 2010 – Private Indemnity and Hold Harmless Agreement: Chase agreed to indemnify several debt buyers after it illegally added fees to 10,000 charged-off accounts before selling them.
December, 2009 – Chase sold a portfolio of judgments to DebtOne, LLC, disclaiming representations and warranties. Chase employee Linda Almonte, in a whistleblower suit against Chase alleged that Chase had committed fraud, because the pool of judgments sold included cases involving fraud and inaccurate records. Chase moved to dismiss on the grounds that its disclaimer of warranties meant the sale was not fraudulent.
A multi-state debt collection law firm, in Georgia, Florida and South Carolina. It is associated with Georgia Receivables, Inc., a debt buyer.
10/20/2015 – Colorado A-G action: Georgia Receivables was denied renewal of its collection license in Colorado for failing to disclose the CFPB’s action against Frederick J. Hanna, it’s Executive Director.
July 2014 – CFPB Lawsuit: Hanna alleged to be running an “assembly line” for lawsuits with no meaningful attorney review. Hanna’s motion to dismiss was denied in July 2015. Hanna’s motion to certify an interlocutory appeal from the denial of the motion to dismiss was denied in November 2015. The case still pending.
Midland Funding, LLC and Midland Credit Management, LLC are subsidiaries of Encore Capital, a publicly traded company. As 6/2/2015, Midland had 4431 CFPB consumer complaints against it In 2013, Midland bought smaller debt buyer Asset Acceptance.
9/9/2015: CFPB Consent Order: the CFPB ordered Encore to pay $42 million to consumers, pay a $10 million penalty and cease collecting on over $125 million in consumer debts. The CFPB found that Encore had engaged in deceptive debt collection tactics.
4/3/2015: New York City Dept. of Consumer Affairs: Midland Credit Management and affiliates settled allegations that they violated city laws for $670,000.
2/2/2015: Colorado A-G action: Midland Credit Management was fined $23,000 for violation of the state FDCPA.
1/9/2015: New York A-G action: Encore Capital was fined $675,000 by the New York Attorney General for filing collection suits on statute barred debts in New York State.
3/2012: West Virginia A-G action: Midland was sued by the West Virginia Attorney general for filing affidavits falsely claiming personal knowledge.
12/15/2011: Minnesota A-G action: Midland Funding consented to a judgment in a suit by the Minnesota Attorney General for filing affidavits falsely claiming personal knowledge in collection actions in that state. The judgment required Midland to reform its practices, in particular regarding affidavits and verification of debts.
7/8/2011: Texas A-G action: Encore Capital was sued by the Texas Attorney General for filing affidavits falsely claiming personal knowledge in Texas collection lawsuits. The suit was settled on undisclosed terms in December 2011.
10/21/2011: Private Lawsuit: Midland entities settled allegations (later rejected on appeal as being insufficient) of robosigning affidavits, which falsely claimed personal knowledge.
Often called the largest debt collector in the world, as of 2011 (see Linda Todd v. NCO Financial Systems, Inc., 1:11-cv-07352) , NCO was majority owned by JP Morgan Chase.
July 2013 – FTC consent Order: NCO repeatedly made collection calls to the wrong people; left voicemails on third-party phones alleging money was owed. NCO ordered to pay $3.2 million and enter into a permanent injunction.
August 2012 – Private lawsuit: NCO sued by a restaurant chain after harassing calls to one of its employees at work.
February 2012 – Minnesota Commerce Department Settlement: NCO hired convicted felons as debt collectors; fined $250,000.
February 2012 – Multi-state settlement: 19 state A-Gs settled with NCO; NCO to pay $1.5 million
December 2008 – Texas A-G Settlement: NCO made harassing and threatening phone calls; paid $400,000.
May 2004 – FTC Consent Order: NCO “re-aged” debts so that they stayed longer on credit reports; NCO paid $1.5 million.
Portfolio Recovery Associates, LLC is a subsidiary of Portfolio Recovery Associates, Inc., a publicly traded company.
9/8/2015: CFPB Consent Order: PRA was fined $8 million, and required to pay $19 million and cease collection of $8 million in debt for various violations of federal consumer protection law.
8/14/2015: Colorado A-G action: PRA was fined $19,000 for violating the state’s version of the FDCPA.
5/15/2015: Private Lawsuit: A trial Jury in Missouri awarded compensatory and punitive damages of over $82 million against PRA after it sued her for someone else’s debt, despite having been told over a period of months that they had the wrong person. The trial court overruled PRA’s motion attacking the size of the award.
5/8/2014: New York A-G action: PRA was fined $300,000 by the New York Attorney General for filing collection suits on time barred debts in New York State. PRA was required to vacate over 2,000 judgments obtained between 2008 and 2014.
12/31/2010: The Wall Street Journal reported that PRA had been using affidavits signed in the name of the deceased “Martha Kunkle” for years. Although Kunkle died in 1995, and PRA decided to stop using affidavits signed in her name in 2008, such affidavits were still in use when the Journal investigated. PRA blamed employees of Providian Bank for writing the fraudulent affidavits.
8/18/2009: Missouri A-G action: PRA was sued by the Missouri Attorney General for attempting to collect debts not owed.