Debt Collectors to Pay Consumer Watchdog $60 Million to Settle Claims - OppLoans

Debt Collectors to Pay Consumer Watchdog $60 Million to Settle Claims - OppLoans Debt Collectors to Pay Consumer Watchdog $60 Million to Settle Claims Debt Collectors to Pay Consumer Watchdog $60 Million to Settle ClaimsInside Subprime: September 11, 2019By Lindsay FrankelThe Consumer Financial Protection Bureau cracked down on two New York debt collectors in late July, charging the firms and their owners over $60 million in a settlement.The case dates back to 2016, when the watchdog alleged that a group of debt collectors led by Douglas MacKinnon and Mark Gray “harassed, threatened, and deceived” consumers. The CFPB accused the firms of regularly inflating the amount customers owed by $200, which sometimes resulted in increases of 600% compared to the original balance.The agency also accused the debt collectors of impersonating government officials and deceptively intimidating customers with the threat of legal action. The two owners neither confirmed nor denied the allegations.Since 2009, the firms “purchased millions of dollars’ worth of consumer debt, inflated those consumer debts, and relied on illegal tactics to extra ct as much money as possible from consumers for their debts,” the CFPB noted.The charges against the debt collectors include $40 million in restitution to customers and a $20 million penalty to regulators. The group is also banned from operating as part of a consent order filed jointly with the New York Attorney General’s office. But since the defendants don’t have the funds, they will be allowed to pay just $10,000 to affected customers and a $1 fine to the CFPB.Still, the settlement indicates that the CFPB is willing to take action against bad actors, even though the agency has been accused of going soft on consumer protection under the Trump administration. Enforcement actions have sharply declined when compared to the robust crackdowns initiated during the Obama era. And director Kathleen Kraninger said in an April speech that the agency was shifting its focus to financial education.But while the regulator has been more lenient on corporate crime since Trump took office, f ormer acting director Mick Mulvaney did state that debt collection would be a priority. The CFPB appears to be more focused on punishing deceitful debt collectors than overseeing other segments of the industry. The regulator has been criticized for siding with payday lenders since announcing in February that it would rescind key requirements of an Obama-era payday loan rule.The bureau noted that about 27 percent of consumer complaints received between 2011 and 2018 concerned debt collection issues. In May, the CFPB proposed new restrictions for debt collectors that would protect consumers from abusive communication practices.But many consumer advocates aren’t satisfied with the watchdog’s narrow focus. “We need the CFPB not only to take action against the most outlandish actors, but also to set strong and clear rules of the road for everybody,” said associate director Lauren Saunders of the National Consumer Law Center.Learn more about payday loans, scams, and cash advances by checking out our city and state financial guides, including Florida, Illinois, Chicago, Ohio, and more.Visit  OppLoans  on  YouTube  |  Facebook  |  Twitter  |  LinkedIn