The Consumer Financial Protection Bureau (CFPB) has ordered two of the largest debt buyers and collectors in the U.S. to pay consumers millions of dollars for using deceptive tactics to collect debts, according to a press release issued by the CFPB.
The CFPB had ordered Encore Capital Group and Portfolio Recovery Associates LLC must pay consumers up to $42 million and up to $19 million, respectively, in refunds.
Encore will also pay $10 million in penalty and to stop collecting over $125 million worth of debts while Portfolio Recovery will be paying $8 million in penalty and to stop collecting on over $3 million worth of debt, according to the press release.
The two companies were found to have bought debts that were potentially inaccurate, lacking documentation, or unenforceable.
The CFPB said in the press release that the two companies collected payments by pressuring consumers with false statements and threatening lawsuits using "robo-signed court documents."
The two companies collected the payments without verifying the debt.
Richard Cordray, the director of CFPB, said in the press release that Encore and Portfolio Recovery has "threatened and deceived consumers to collect on debts they should have known were inaccurate or had other problems."
"Now, the two biggest debt buyers in the market must refund millions and overhaul their practices," he said. "We will continue to take action to protect consumers from illegal and obnoxious debt collection practices."
The Washington Post adds that the two firms buy debts from credit card companies, phone providers and other consumer companies for pennies on the dollar.
Once they have bought these debts, they are allowed to collect on the full amount from the consumers.
However, the debts the firms purchased often had the potential to be inaccurate, according to The Washington Post.
The firms knew this but still ignored consumers who challenged the debt.
Encore told The Washington Post that the settlement had related to practices that had already been changed by the company.
The company also said that they don't agree with the assessment of the CFPB but accepted the settlement to "move forward."
The PRA Group told The Washington Post that they do not re-sell accounts and that it has several consumer standards in place.
The PRA Group is the parent company of Portfolio Recovery.
Cordray said in separate statement that Encore and Portfolio Recovery, being the two largest debt buyers in the country, will be "leading the change in the marketplace as they must overhaul their debt collection practices and reform the ways they collect debts through lawsuits."
