lawsuit Filed Against Portfolio Recovery Associates – Collection Agencies Violated Federal Law, Attorney General Says
The lawsuit against Portfolio Recovery Associates is ongoing as of March 6, 2021. This suit was brought by New York Attorney General Eliot Spitzer. Mr. Spitzer has charged the company with PPI fraud, charging that the lender’s sales pitch encouraged their agents to collect debts without providing any services other than collection. According to Mr. Spitzer, this case is among the most “dire” of his career. His office is currently reviewing the complaint to determine whether or not it will go to trial.
In the complaint, Mr. Spitzer states that Portfolio Recovery Associates promised to pay all of a debtor’s bills, but instead collected fees for collecting the debts. On the basis of this promise and the failure of Portfolio Recovery Associates to disclose to the debtor that they would be collecting fees on their behalf, Mr. Spitzer has charged the PPI lenders with fraud, the illegal recovery of debts in violation of federal and state law, and money laundering. If found guilty, the PPI lenders could face huge fines and even jail time. For its part, the company stated that all of their representatives were properly trained in how to handle debt collections.
Currently, there is only one lawsuit against Portfolio Recovery Associates. That lawsuit was filed by the state attorney general in the state of New York. In that suit, the state claimed that the debt collector was not performing the duties required by federal and state law. According to the complaint, the debt collector violated the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, and the Electronic Funds Transfer Act by not obtaining permission from the client before sending the funds.
The attorney general further claimed that Portfolio Recovery Associates repeatedly violated the provisions of the Fair Debt Collection Practices Act and the Fair Credit Reporting Act. Finally, according to the attorney general, the PPI was not returned to the client following an unsuccessful settlement. At this point, it appears that a class-action lawsuit has been filed against the PPI lender.
According to the FCRA, the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, and the Electronic Funds Transfer Act, the PPI lender must clearly inform consumers that their PPI will not be returned and give them an understandable explanation as to why it will not be. This protects the consumer from the illegal practices of collection agencies. On a related note, the FCRA also requires that the PPI lender provide the consumers with an itemized statement detailing the charges for their account.
According to the attorney general, the lawsuit was filed because the PPI lender did not follow proper procedures to process the loan application. Furthermore, the FCRA further claims that the PPI did not instruct the Portfolio Recovery Associates that they were prohibited from collecting payments from the client, violated the Fair Debt Collection Practices Act, and failed to disclose the facts about the agreed-upon plan until the lawsuit was filed. If the PPI lender is unable to prove that these violations occurred, the lawsuit will fail. If, however, the PPI lender is able to prove that the actions or inactions violated the FCRA, or that the regulations were not violated by the client, then the lawsuit will move forward. The attorney general will determine if the complaint has a likelihood of winning based on all of the evidence.