New California Regulator Launches Investigation Into Collection Industry; Subpoenas 12 Companies

The California Department of Financial Protection and Innovation (DFPI) came out swinging yesterday with its first major action, issuing subpoenas to a dozen companies in the accounts receivable management industry, investigating consumer complaints about alleged unlawful, unfair, deceptive, or abusive collection practices.

The companies that were issued subpoenas are: Portfolio Recovery Associates, Encore Capital Group, Midland Credit Management, Midland Funding, Atlantic Credit and Finance, Enhanced Recovery Company, Resurgent HP LLC and LVNV Funding LLC, IC System, The Offices of Morgan and Moss, Convergent Outsourcing, Spectrum Billing Services, and Monterey Financial Services.

Consumers have alleged that the companies make repeated phone calls, fail to validate debts, and threaten to sue consumers for debts that are not owed. The subpoenas request documents detailing how those companies collect debts and communicate with consumers, according to the DFPI’s announcement. Both state law in California, as well as the Fair Debt Collection Practices Act prohibit collectors from making repeated phone calls over a short time to annoy or harass, threatening harm, calling at inconvenient or unusual times, or attempting to collect on a debt that the consumer does not owe.

“We take our expanded responsibility very seriously and are moving swiftly to ensure debt collectors do not violate the rights of California consumers,” said DFPI Commissioner Manuel P. Alvarez, in a statement.

The DFPI was empowered to issue the subpoenas following the enactment last year of the California Consumer Financial Protection Act, which, among other actions, renamed the state’s Department of Business Oversight to the DFPI. The law prohibits the use of engaging in unfair, deceptive, or abusive acts or practices with respect to consumer financial products and services.

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