Last Wednesday, the Consumer Financial Protection Bureau (“CFPB”) ordered two of the nations largest debt collectors, Encore Capital Group and Portfolio Recovery Associates, to refund consumers millions of dollars due to their deceptive debt collection practices. Both companies are in the business of collecting old debt and likely knew there were potential issues that would prohibit them from legally collecting on the debt.  This led to the companies using unethical means to collect the debt, including illegal litigation processes. Portfolio Recovery Associates is based in Norfolk, VA and Encore is based in San Diego, CA.

As The San Diego Union~Tribune reported, CFPB Director Richard Cordray stated during last Wednesday’s press conference, “Our actions today against these two companies reinforce the importance of accountability in the debt buyer market that is so often rife with consumer abuse.  Debt collection serves a crucial role in the proper functioning of consumer credit markets, but it matters enormously just how companies go about performing this task. Collectors must do much more than they have done in the past to ensure they are following the law to its fullest measure.”

Encore and Portfolio Recovery Associates are accused of buying debt that was potentially unenforceable. They pressured consumers to pay back this unverified debt, utilizing robo-signed court documents to pursue lawsuits against consumers. Lawsuits that they hoped consumers wouldn’t mount a defense against.

Both companies made it a practice to buy potentially inaccurate debts, then suing the consumers with no intention of proving the validity of the debt. They used short cut-methods to launch thousands of lawsuits against consumers with false documentation of the actual debt. From 2009-2013 Encore and Portfolio Recovery Associate sent consumers thousands of letters offering to “settle” debt that was, in fact, too old for litigation.

The CFPB has ordered Encore to pay up to $42 million in refunds and stop collection on $125 million in debt and Portfolio Recovery Associates to pay back $19 million in refunds and stop collecting on $3 million in debt. In addition, they must stop collecting debts that they can’t verify; all lawsuits must be filed with accurate documentation; they must provide consumers with all relevant information on their debt before they file a lawsuit; and they cannot sue on debts that are time-barred. Encore will also pay a $10 million penalty to the CFPB’s Civil Penalty Fund and Portfolio Recovery Associates will pay $8 million to the fund.

If you have been contacted by Portfolio Recovery Associates, Encore, or any of their affiliates don’t throw up your hands and give up. You deserve to know if the debt is indeed collectible. You deserve to know who is attempting to collect a debt against you. Most important, you deserve a fighting chance. Rather than throwing in the towel, contact the Gamez Law Firm to figure out your options for dealing with these companies.

>> Daniel R. Gamez, an attorney focusing exclusively in debt settlement, is licensed to practice in all state and federal courts in California and Texas. Mr. Gamez owns and operates the Gamez Law Firm in La Jolla, CA. For more information, please contact Daniel Gamez at 858-217-5051, or visit