ON YOUR SIDE: The two largest debt collectors may now owe you money

ON YOUR SIDE: The two largest debt collectors may now owe you money

(WWBT) - The tables have turned on the country's two largest debt collectors, and now they might owe you money.

The Consumer Financial Protection Bureau (C.F.P.B) took severe action accusing the companies of using deceptive tactics to collect bad debts. Two big firms that buy bad debt are Encore Capital Group and Portfolio Recovery Associates.  They must comply with three demands from the C.F.P.B.

Those demands involve a huge refund to consumers, a hefty fine, and stopping collection on millions of dollars of debts. Here's the money break down for both companies:

  • Encore must pay up to $42 million in consumer refunds, and a $10 million dollar penalty, and stop collection on over $125 million worth of debts.
  • Portfolio Recovery Associates must pay $19 million in consumer refunds, and an $8 million dollar penalty, and stop collection on over $3 million worth of debts.  These companies must overhaul their debt collection and litigation practices and stop reselling debts to third parties.
  • C.F.P.B. accuses both of using deceptive tactics to collect bad debts, and of trying to collect debts, that people didn't owe.

Published reports say Encore Capital Group and Portfolio Recovery Associates bought debts, that were potentially inaccurate, lacking documentation, or unenforceable.  Without verifying the debt, C.F.P.B. says, the companies collected payments by pressuring consumers with false statements, and churning out lawsuits using robo-signed court documents.

Virginia's Better Business Bureau C.E.O. says it's a big win for consumers.  Tom Gallagher says, "It puts the industry on notice. I don't think they would have gone after two of the top ones unless there was an industry practice and that's what has to stop. So, the companies need to stop doing that and we as consumers need to stop falling for false information."

The debt collectors and their subsidiaries did not admit or deny any wrongdoing in the settlements. Consumers who are due a refund from these two companies, will not have to do anything to collect their money. The way we understand the refund process, people who were injured by these  practices will be contacted directly by Encore Capital Group, based in San Diego, and Portfolio Recovery Associates headquartered in Norfolk, Virginia.

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