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Financial Services Law Insights and Observations

CFPB, FTC, and states announce debt collection enforcement operation

Federal Issues CFPB FTC Enforcement Debt Collection State Issues

Federal Issues

On September 29, the CFPB, FTC, and more than 50 federal and state law enforcement partners announced a nationwide enforcement and outreach effort titled “Operation Corrupt Collector” to address illegal debt collection practices. As of the date of the announcement, according to the CFPB, the operation includes five cases by the FTC, two cases by the CFPB, and three criminal cases by the DOJ and the U.S. Postal Inspection Service. Moreover, 16 states have also reported actions as part of the operation. Among the five cases brought by the FTC, two were announced in conjunction with the operation. In the first, the FTC brought charges in the U.S. District Court for the District of South Carolina alleging that a debt collection operation (consisting of five entities and three persons) used deceptive tactics to threaten false legal action through the use of robocalls in order to collect debts consumers did not owe or the operation did not have the legal right to collect. In the second, filed with the same district court, FTC alleges a company and its operators, with the assistance of the defendants in the first action, falsely claimed to represent a law firm and threatened consumers with arrest if the debts were not paid. According to the FTC, the district court granted temporary restraining orders against the defendants in both actions.

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