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Homegrown Virginia debt collector settles charges of unlawful acts

In 1996, two bankers started giant debt-collection business Portfolio Recovery Associates, LLC (PRA), with its headquarters in Norfolk, Virginia, and other commonwealth offices in Danville and Hampton as well as in other states. In about 25 years, PRA has become one of the nation’s largest collection agencies – but the journey has not been a smooth one.

PRA’s principal business is as a debt buyer, purchasing difficult-to-collect or written-off consumer debts – like those for utilities or credit cards – for drastically reduced prices. Then, PRA tries to enforce the debt against the consumer-debtor. However, regulators and consumers have continually raised red flags about the way PRA approaches debt collection.

In April 2023, a federal judge entered a stipulated final judgment and order adopting an elaborate settlement agreement between government regulators and PRA for allegedly engaging in unlawful, deceptive actions in their debt collection processes. While PRA has not admitted or denied any wrongdoing, the agreement does require them to provide redress to a group of consumers alleging the company mistreated them by not adhering to federal debt collection laws.

PRA also agreed to future remedial measures and to specific adherence to the law in its ongoing interactions with alleged debtors.

The 2015 allegations

The 2023 stipulation has roots in a similar 2015 dispute between PRA and the Consumer Financial Protection Bureau (CFPB). The CFPB is the federal government agency responsible for enforcing laws and regulations that protect people from abusive and illegal debt collection practices.

In 2015 CFPB accused PRA of violating the Consumer Financial Protection Act of 2010 (CFPA) and the Fair Debt Collection Practices Act (FDCPA). The agency found that “Portfolio Recovery Associates bought debts that were potentially inaccurate, lacking documentation, or unenforceable. Without verifying the debt [PRA] collected payments by pressuring consumers with false statements and churning out lawsuits using robo-signed court documents.”

At that time, the parties stipulated to a lengthy, detailed consent order pursuant to which PRA agreed, without admitting or denying deceptive practices, to take certain actions, pay a large penalty and issue refunds to involved consumers.

PRA committed to many remedial actions, including ceasing collection efforts on certain debts, stopping the sale of questionable debt to third parties, releasing judgments against debtors from lawsuits filed after their deadlines, refraining from collection actions such as filing lawsuits on unsubstantiated debts, providing required information and documentation to consumers, adhering to legal practices concerning expired debts and more.

The 2023 stipulated order

The new stipulated judgment addresses CFPB allegations that PRA violated the 2015 agreement and has continued to violate federal consumer protection laws. The CFPB director commented that the company was still engaging in “intimidation, deception and illegal … tactics” during attempts to collect questionable debt, according to Reuters.

The 2023 order requires PRA to pay $24 million in consumer compensation and a fine that will go to the CFPB victim relief fund. In a news release, PRA Group (the parent of PRA) noted that the $15 million going to impacted debtors “represent[s] less than one-tenth of 1% of PRA’s active accounts.” Even if the remedial payments are affordable to PRA, certainly the relief will be helpful to those debtors who were allegedly taken advantage of through illegal debt-collection practices.

Anyone being targeted with abusive collection practices should seek advice and counsel of an experienced attorney to understand what legal remedies may be available to them.