By Laura J. Lowenstein, Esq.
Do any of these collection companies sound familiar … Universal Debt Solutions, LLC; WNY Solutions Group, LLC; Check & Credit Recovery, LLC; S Payment Processing & Solutions, LLC; WNY Account Solutions, LLC; and Credit Power, LLC? I hope not because they are now the subject of a large lawsuit brought by the Consumer Financial Protection Bureau (CFPB). If you are a regular reader of my blog or know me professionally, you know that as an attorney I take compliance VERY seriously. Yet, the collection world continues to astound me with their sheer audacity and blatant criminal – as opposed to simply non-compliant – behavior. Let’s take these above-named agencies as an example.
Operated out of Georgia and New York by residents in both states, these agencies allegedly engaged in a scheme whereby they purchased consumers’ personal information and then used a telemarketing company to robo-call millions of individuals in an attempt to coerce them into paying non-existent or “phantom” debts. Assuming the allegations made in the suit by the CFPB are true, these collection agencies engaged in a systematic effort to harass and deceive unsuspecting consumers into paying a debt that many of them did not owe or, at a minimum, did not owe to any of these collection agencies.
What is interesting about this case is that the CFPB is not only going after the collection agency owners but also the service providers. In other words, the CFPB has also named the telemarketer in the suit as well as the four merchant payment processors. The CFPB contends that without the assistance of these service providers, the collection agencies could not have carried out their scheme. Furthermore, the CFPB contends that these service providers should have recognized and acted upon, in the CFPB’s opinion, numerous “red flags” regarding the actions of their collection agency-clients.
Many commentators are seemingly shocked at this case and the implied overreaching of the CFPB in naming the service providers in the suit. While it remains to be seen whether the United States District Court for the Northern District of Georgia will adjudge the service providers as properly-named defendants upon what I suspect will be summarily-filed motions to dismiss by the attorneys for the service providers, I am not at all surprised by the CFPB’s actions in naming these defendants. To me, this case is another natural extension of the willingness and expressed desire of the CFPB and various Courts to expand the net of liability when it comes to illegal collection activity.
So whether you are a client of a collection agency or a service provider retained by a collection agency, you MUST ascertain its compliance record BEFORE you do business with them. Ask questions because any legitimate collection operation will be happy to answer them. For example, ask if they have ever been sued and found guilty of any Federal, State of local statute or law and, if so, when and how many times? … if they have ever been forced to pay statutory fines and, if so, when and how many times? … if they have ever been found by the CFPB to have acted improperly by failing to timely and thoroughly respond to a filed complaint? … if they have ever had their NYC DCA license revoked or suspended? … if they have ever been the subject of a formal investigation by a governmental agency? … and, last but not least, make sure you ask if they are fully-insured? If you are going to ask only one question, let it be this last one because in this day in age it is very difficult and expensive for a collection agency to get insurance at all and carriers will increasingly only insure those agencies that have clean records.
Can this new case filed by the CFPB be characterized as one depicting the egregious behavior of only a handful of corrupt agencies? Of course. But this case is only one example of the compliance microscope collection agencies and attorneys are now put under. In fact, in New York State, an additional and new overlay of regulations and disclosures is now required to be made to consumers who owe a debt. Is your collection agency or attorney in compliance with these new laws? If not, you run the risk of liability as a result of the actions – or inaction – of the very agency you have hired to help you.
The bottom line is that today – more than ever – expanding culpability and increased regulations means that creditors simply can no longer afford not to know the practices and track record of who they have hired to collect on their behalf.
For more information on Capital Resource Management, Inc. and our collection practices, please feel free to contact us at 1-844-277-3277 (ARREARS).