The debt collection industry is being targeted for receiving funds under the Paycheck Protection Program because many of those companies have been complained about by consumers to the Consumer Financial Protection Bureau or been subject to regulatory and enforcement actions.
Debt collectors and payday lenders received more than $580 million in PPP loans, according to the report, published in The Washington Post last Friday. The report says that 170 of those recipients were the subject of at least 100 complaints by consumers with the CFPB and that 25 have been “subject to legal enforcement or consumer alerts” either by the CFPB or the Federal Trade Commission.
“Giving these companies government money was a terrible idea,” said Don Yarbrough, a lawyer in Fort Lauderdale, Fla., who represents debtors in collection cases, according to the report. The government loans to debt collectors essentially finance “debt collection against people who already are dealing with a global pandemic.”
The report cited a pair of debt collectors, one of whom received $1.5 million under the PPP program, and had paid a fine of $500,000 in 2018 after being accused of engaging in unlawful collection acts by the CFPB.
The report also questioned whether any of the companies needed the money from the PPP program because “many of these firms are prospering under the pandemic.”
Mark Neeb, the chief executive of ACA International, defended debt collectors in the report, noting that many companies “have been negatively impacted by the pandemic, and the PPP has helped preserve those jobs.”
When it was enacted, the PPP was intended to make loans available to “any business,” according to the report.