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Financial Services Law Insights and Observations

CFPB sues debt collection company that used DA letterhead to threaten consumers

Federal Issues CFPB Enforcement Debt Collection FDCPA CFPA

Federal Issues

On December 9, the CFPB announced it filed a complaint in the U.S. District Court for the Western District of Missouri against a Missouri-based company alleging violations of the FDCPA and the CFPA. The company allegedly engaged in deceptive and otherwise unlawful debt collection acts and practices in the course of operating “bad-check pretrial-diversion programs on behalf of more than 90 district attorneys’ offices throughout the United States.” According to the Bureau, the company used district-attorney letterhead to threaten consumers with criminal prosecution unless they paid the amount of the dishonored check, enrolled and paid for a financial-education course, and paid various other administrative fees. The complaint claims that not only did the company fail to include required FDCPA disclosures in the letters it sent to consumers, it also failed to identify itself in the letters and did not inform consumers that it is a debt collector and not a district attorney. The company also allegedly failed to inform consumers that district attorneys almost never prosecute individuals who do not pay back the amount owed. Moreover, the Bureau claims that in most cases the company did not refer cases for prosecution, even if the check writer failed to respond to the collection letter, did not pay the alleged outstanding debt and fees, or failed to complete the financial-education course. The complaint seeks an injunction against the company as well as damages, redress, disgorgement of ill-gotten gains, and the imposition of civil money penalties.

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