The CFPB and the New York Attorney General’s office have filed a proposed settlement with a New York-based debt collector for debt collection violations over a period of 10 years. The settlement totals $60 million.
The Consumer Financial Protection Bureau, together with the New York Attorney General’s office, has settled with a Buffalo, New York-based debt collection company along with the individuals running a "massive debt collection scheme." The proposed settlement applies to Douglas MacKinnon, Mark Gray, Northern Resolution Group, LLC, Enhanced Acquisitions, LLC, and Delray Capital, LLC. The case was filed in the United States District Court for the Western District of New York. If approved by the court, MacKinnon and Gray would pay $40 million in redress to consumers. The settlement also includes a civil money penalty of $10 million to both the Bureau and New York.
New York Attorney General Letitia James issued a statement on the settlement, stating that there is "zero tolerance for individuals who use illegal and unconscionable tactics to cheat consumers out of their hard-earned money." According to James, "Not only did the defendants force consumers to pay more than they owed, but they falsely threatened to have consumers arrested for not complying with these predatory practices."
Allegations in the complaint. The Bureau alleged that the debt collectors engaged in unfair and deceptive debt collection practices in violations of sections 1031(a) and 1036(a)(1) of the Consumer Financial Protection Act of 2010, along with violations of the Fair Debt Collection Practices Act and New York state laws. The November 2016 complaint alleged that since at least 2009, the companies, operating under the supervision of MacKinnon and Gray, served as the lynchpin of a massive collections scheme. The Bureau alleged that MacKinnon and Gray operated a network of companies that harassed, threatened, and deceived millions of consumers across the country into paying inflated debts or amounts they may not owe. The operation was alleged to have routinely inflated consumer debts and relied on illegal tactics to extract as much money as possible from consumers for debts. MacKinnon also allegedly set up a network of at least 60 additional "fly-by-night debt-collection firms" to collect on the large debt portfolios purchased by MacKinnon and Gray’s companies (see Banking and Finance Law Daily, Nov. 2, 2016).
Settlement details. The settlement permanently bans MacKinnon and Gray and their defendant companies from the debt collection industry. The individuals would also be prohibited from misrepresenting material facts about financial-related products and services, profiting from customers’ personal information collected as part of the challenged practices, and failing to dispose of such information properly.
Under the terms of the settlement the defendants would pay $40 million in redress to consumers and a $10 million civil money penalty to both the Bureau and New York, for a total penalty of $20 million.
The order also imposed a judgment for redress of $4 million, civil money penalties of $1 million to the Bureau, and a judgment for civil money penalties of $1 million to the New York Attorney General. These amounts were suspended unless the court determines that the defendants’ financial information was not accurate.
Companies: Delray Capital, LLC; Enhanced Acquisitions, LLC; Northern Resolution Group, LLC
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