WASHINGTON (9/10/15)--The country's two largest debt buyers were hit with hefty fines Wednesday by the Consumer Financial Protection Bureau. The bureau charged the two entities with illegal debt collection activities.
San Diego-based Encore Capital Group and Norfolk, Va.-based Portfolio Recovery Associates (PRA) were ordered by the regulator to reform their business practices, including ceasing to resell or collect debts they cannot verify, among other things.
The bureau is ordering Encore to refund consumers up to $42 million, stop its collection efforts on $125 million in debts, and pay a $10 million penalty. PRA must refund consumers about $19 million, cease collections on $3 million in debts, and pay an $8 million penalty.
CFPB Director Richard Cordray said in a release, "Our investigation found that Encore and PRA bought debts that they knew or should have known were inaccurate or could not legally be enforced. In some cases, the seller informed them that a portion of the debts they were buying may be faulty.
"In other cases, the companies should have known about that concern based on contractual disclaimers, past practices of debt sellers, or consumer disputes. The companies consciously bought debt that they knew was suspect because the seller expressly represented that documents were not available to validate some or all of the accounts."
The bureau is currently working on new rules for the debt collection market.
Click here for more on the CFPB's allegations against the two debt buyers.