A debt buyer and collection law firm in California have reached a settlement with a local District Attorney after being accused of suing an individual in an attempt to collect a debt that the individual did not owe, according to a published report. The settlement includes a civil penalty, a fine to reimburse the county for the costs of the investigation, and a prohibition for both the debt buyer and the law firm against using what are referred to as “gag clauses” that prevents individuals from reporting incidents to authorities.
The settlement with Cavalry Portfolio Services and Winn Law Group will see the parties pay $25,000 in civil penalties and $5,000 in reimbursement fees, according to the report, citing a press release that was distributed by Cynthia Zimmer, the District Attorney of Kern County, Calif.
After an individual was sued for an alleged debt that was owed to Cavalry, the individual filed a complaint with the DA’s office. The individual claimed he or she did not owe the debt and that even after Cavalry and the law office were informed that the suit had been filed against the wrong individual, they continued to proceed with the lawsuit, according to the report. The defendants also furnished information about the debts to credit reporting agencies for months before informing the agencies of the “erroneous reporting,” according to the report.
The defendants eventually agreed to dismiss the underlying collection lawsuit, but only on the condition that the individual release any claims against the defendant and agree not to report the incident to authorities.
“We will take action to protect consumers from unfair debt collection practices, especially ones that serve to artificially deprive consumers of the assistance that government agencies can provide,” Zimmer said in a statement. “Fortunately, in this case both Cavalry and Winn Law Group cooperated with the investigation and an appropriate resolution was reached.”
