A debt buyer that was sued yesterday by the Consumer Financial Protection Bureau said in a statement that it intends to fight the lawsuit and said the CFPB’s suit referenced six accounts in which allegedly illegal activity took place before the debt buyer was even in business and “embellishes them to make a case.”
A copy of the complaint, in the case of CFPB v. United Debt Holding, JTM Capital Management, United Holding Group, Craig Manseth, Jacob Adamo, and Darren Turco can be accessed by clicking here.
The CFPB is accusing the defendants of violating the Consumer Financial Protection Act and Fair Debt Collection Practices Act by allowing third parties to deceive consumers and selling debts to collection companies that were engaged in unlawful activities. The defendants allegedly received “hundreds” of complaints that collection companies working the defendants’ accounts were threatening consumers with arrest, jail, or lawsuits if debts were not paid immediately. The defendants allegedly continued to place debts with these agencies, even after reviewing call recordings in which some companies “falsely threatened suits or made false statements about credit reporting,” according to the CFPB.
“This debt collection ring and its operators created the conditions for rampant abuse,” said CFPB Director Rohit Chopra, in a statement. “Companies cannot profit and evade liability simply by creating a maze of shape-shifting entities and enabling third parties to take advantage of consumers.”
In its statement, a full copy of which can be read below, UHG said the complaints that were made by consumers predate when UHG began operating and that it was “telling that the CFPB did not allege that consumers were harmed.”
In UHG’s statement, Manseth said that the company wanted to resolve the matter “amicably” with the CFPB, but that the regulator’s “settlement demands were unreasonable in light of their facts against UHG, the old age of the allegations, and that our collection agency partners make millions of compliant consumer contacts per month.”
Assets and employees of UDH and JTM transitioned to become assets of UHG and “for all intents and purposes, UDH, JTM, and UHG have operated as a single entity under the control of the Individual Defendants since at least mid-2017,” according to the complaint.
Even though none of the collectors working the defendants’ accounts were authorized to sue, some collectors made “express and implied representations” that the communication in question was a “final step” before the client was going to file a lawsuit, according to the complaint.
Manseth said in his statement that any of the allegations were against UDH and JTM and occurred before UHG began operating. “The Bureau’s actions to file a lawsuit against UHG based on consumer complaints that predate UHG is surprising,” said Manseth, the owner of former debt buying firm UDH and an investor in UHG. “UHG operates a first-class compliance program that redresses all issues when we become aware of them.”
STATEMENT FROM UNITED HOLDING GROUP, LLC REGARDING CFPB LAWSUIT
On January 10, 2022, the Consumer Financial Protection Bureau (“Bureau” or “CFPB”) filed a complaint alleging Consumer Financial Protection Act and Fair Debt Collection Practices Act violations based on a handful of unverified consumer complaints dating back to 2015. The lawsuit names three debt buyers, United Debt Holding LLC (UDH), JTM Capital Management, LLC (JTM), and United Holding Group, LLC (UHG) and individuals with various ownership interests in one or more of the companies. Neither UDH nor JTM are currently in business. UHG and the individual defendants intend to fight the matter.
“The Bureau’s actions to file a lawsuit against UHG based on consumer complaints that predate UHG is surprising,” says Craig Manseth, the owner of former debt buying firm UDH and an investor in UHG. “UHG operates a first-class compliance program that redresses all issues when we become aware of them. It’s telling that the CFPB did not allege that consumers were harmed.” UHG anticipates filing a motion to dismiss.
No accounts purchased or placed by UHG are described in the Bureau’s complaint. Rather, the complaint’s allegations focus on collection activity by another debt-buyer, Delray, who purchased accounts from UDH in 2015. In July 2019, the CFPB and New York state AG settled a matter with Delray’s owner and his companies for a one-dollar ($1) civil money penalty to the Bureau and $10,000 for consumer redress. Due to the old age of the allegations, the CFPB’s pleading has nonactionable claims, as most of the conduct described arose from a debt sale over five years ago.
“It’s not clear from the complaint why UHG is named. We are working with our attorneys to develop a vigorous defense,” says Manseth. The lawsuit takes six examples from before UHG was in business and embellishes them to make a case. Specifically, the lawsuit cites one telephone call recording on an account owned by JTM and five complaints to the CFPB or Better Business Bureau about accounts owned by UDH. All allegations regarding arrest threats are directed at UDH. Both UDH and JTM ceased doing business in 2018 and 2019, respectively.
“We asked the Bureau repeatedly to substantiate their accusations, but they have not. We would prefer to resolve this amicably, but their settlement demands were unreasonable in light of their lack of facts against UHG, the old age of the allegations, and that our collection agency partners make millions of compliant consumer contacts per month,” says Manseth.
UHG’s partners and vendors are the best in the industry and UHG is proud of its strong record of legal compliance. Like other receivables management firms who have fought the Bureau and won, UHG looks forward to defending the CFPB’s unfounded allegations in court.