CFPB Shortchanging Scammed Consumers, Senate Democrat Alleges

The ranking member of the Senate Banking Committee is seeking information from the Consumer Financial Protection Bureau about why individuals who were victimized in a scam by a debt collector are not being afforded the opportunity to receive restitution for what they lost.

In a letter to Kathy Kraninger, the director of the CFPB, Sen. Sherrod Brown [D-Ohio], points out that the amount of restitution being paid back to consumers has declined to an average of $925,000 per week during her tenure, compared with $43 million per week that was repaid when Richard Cordray ran the agency.

Along with detailing four recent enforcement actions in which the CFPB did not impose a restitution penalty on the recipients of the consent orders, Sen. Brown goes into great detail about the recent settlement with Asset Recovery Associates.

In this case, the CFPB limited restitution to those who “affirmatively ‘complained about a false threat or misrepresentation’ by Asset Recovery Associates,” Sen. Brown wrote, arguing that “that is not and never has been the standard for providing restitution to consumers. ‘Restitution ‘is a form ancillary relief’ that a court can order ‘[i]n the absence of a proof of actual damages.’ ‘ The government’s request for restitution must ‘reasonably approximate[] the defendant’s unjust gains’ or ‘the full amount lost by consumers.’ “

Because there was “no legal basis” for the CFPB to “shortchange victimized consumers,” Sen. Brown requested a number of pieces of information from the CFPB, including:

  • The number of consumers who meet the definition of “Affected Consumer,” and for how much they will receive pursuant to the Bureau’s consent order with Asset Recovery Associates.
  • The total number of consumers from whom Asset Recovery Associates:
    • Attempted to collect a debt; or
    • Collected any portion of debt.
  • The total amount of funds that Asset Recovery Associates collected from consumers from Jan. 1, 2015 through the effective date of the consent order.
  • All documents and communications referring or relating to the issue of restitution in the Bureau’s settlement with Asset Recovery Associates, including all memoranda (drafts or final), all drafts of the proposed consent order, and all meeting minutes.
  • All communications between the Bureau and Asset Recovery Associates or its representatives referring or relating to the issue of restitution in the Bureau’s settlement with Asset Recovery Associates.

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