The Consumer Financial Protection Bureau yesterday announced it had entered into a consent order with a debt collector, ordering it to pay $204,000 after it was found to be threatening to sue, suing, and demanding payments from consumers in three states even though it did not have the proper licenses to do so.
A copy of the consent order against RAB Performance Recoveries can be accessed by clicking here.
As part of the consent order, RAB neither admitted nor denied any of the allegations made against it. It was accused of misrepresenting it had a legally enforceable right to recover payments through the judicial process in violation of the Fair Debt Collection Practices Act and the Consumer Financial Protection Act of 2010.
RAB’s business model between 1999 and 2012, according to the consent order, was to purchase portfolios of consumer debt from debt brokers and place those accounts with collection law firms. The law firms would send collection letters, and if an account was not settled, the law firm would initiate a collection lawsuit against the individuals. RAB obtained judgments on a “vast majority” of those suits and then sought to collect on those judgments. The company stopped purchasing portfolios in 2012 and has not filed a collection lawsuit without the proper state license since 2014.
The CFPB found the company collected or attempted to collect debts in New Jersey, Connecticut, and Rhode Island without obtaining the proper license to do so.
Under the consent order, RAB is prohibited from collecting on any of the accounts in those states when it did not hold a proper license, ordered to vacate all judgments and suspend collection of those judgments, order to notify consumers that the payment agreements have been satisfied, and pay a civil money penalty of $204,000.
