The Bureau of Consumer Financial Protection on Friday announced an $800,000 settlement with National Credit Adjusters and its former chief executive, Brad Hochstein, but decided against forgiving $60 million in unpaid debts that were sought by former director Richard Cordray when he initiated the enforcement action before leaving office.
Under terms of the consent order, National Credit Adjusters will pay $500,000 of a $3 million fine, and Hochstein will pay $300,000 of a $3 million fine. Hochstein has been permanently banned from the collection industry and National Credit Adjusters has been barred from engaging in certain collection practices.
Those practices include not misrepresenting the amount of the debt owed, not misrepresenting that they intend to take legal action, including filing lawsuits or having individuals arrested, according to a copy of the consent order.
A report back in March had indicated that Mick Mulvaney, the acting director of the BCFP, had decided not to pursue litigation against National Credit Adjusters or Hochstein. There were no indications why Mulvaney opted not to include the $60 million in debt forgiveness as part of the settlement.
National Credit Adjusters bought and sold portfolios of debts. It placed debts it purchased with a number of collection agencies, including Delray Capital LLC; First Capital Recovery, Inc.; Lionstone Holdings Group LLC; Brookshaw Management LLC; and Clear Credit Services, LLC. Those agencies misrepresented how much borrowers had to pay, threatened individuals with lawsuits and arrest, and continued to place accounts with those agencies despite knowing some of the tactics being used, according to the consent order.
The company was accused of violating the Consumer Financial Protection Act and the Fair Debt Collection Practices Act, while Hochstein was charged with violating the CFPA.
Neither NCA nor Hochstein admitted any wrongdoing as part agreeing to the consent order.