New York Debt Collection Ring Shut Down for Illegal Practices

Advocate Andy

Consumer Bureau joins with New York Attorney General to fine, shutter network of debt collectors

The Consumer Financial Protection Bureau (CFPB) and the New York Attorney General's Office announced this week that by joint effort, the two have shut down an extensive debt collection ring based in New York.

New York's Attorney General Letitia James explained the violations committed by a group of companies comprising the debt collection enterprise:

“This debt collection operation used illegal and deceptive tactics to prey on consumers, and now they are paying the price for the harm they caused. Predatory debt collectors make their profit by targeting hardworking consumers and then illegally saddle them deeper into debt. These debt collectors used harassing calls and false threats to coerce consumer to pay, not only is that illegal, it’s also downright shameful. Today’s action should send a strong message to debt collectors nationwide that we will not hesitate to use the full force of the law to hold them accountable if they hurt consumers.”

The companies named in the action are JPL Recovery Solutions; Regency One Capital; ROC Asset Solutions, which does business as API Recovery Solutions and Northern Information Services; Check Security Associates, which does business as Warner Location Services, Pinnacle Location Services, and Orchard Payment Processing Systems; Keystone Recovery Group; and Blue Street Asset Partners. The individual defendants are owners Christopher Di Re, Scott Croce, and Susan Croce, as well as Brian Koziel and Marc Gracie, who acted as managers of some or all of the companies.

The CFPB's Rohit Chopra called out specific actions taken by the network of companies that led to the enforcement action:

“It is illegal for debt collectors to orchestrate smear campaigns using social media to extort consumers into paying up,” said CFPB Director Chopra. “Our action with the New York Attorney General bans the ringleaders of this operation from the industry to halt further misconduct.”

As a result of the action, the companies named will no longer be allowed to operate and the owners are banned from the debt collection industry. Additionally, the companies will pay $4 million in fines.

In terms of specific violations of law, the investigation found that the companies in question:

  • Falsely claimed arrest and imprisonment: The collection companies threatened people with arrest and imprisonment if they did not make payments. In fact, people are not subject to arrest or imprisonment for failure to pay debts.
  • Lied about legal action: The companies falsely threatened people with legal action, including wage garnishment and property seizures. In reality, the network never sought or obtained any legal judgments.
  • Inflated and misrepresented debt amounts owed: The defendants lied about debt amounts owed to convince people that paying the amounts they actually owed represented a substantial discount. To press people even further, collectors said it was the offers would only be available for a short period of time.
  • Created “smear campaigns”: Using social media and other methods, the collectors pressured people to pay by contacting and disclosing the debts to their immediate and distant family members, grandparents, in-laws, ex-spouses, employers, work colleagues, landlords, Facebook friends, and other known associates. The network did this even after collectors were told by victims to stop contact. Victims described these tactics as “emotional terrorism.”
  • Harassed people with repeated phone calls: The collectors repeatedly called people multiple times every day over periods lasting a month or longer. The network, in fact, instructed its collectors to let the person hang up on each call, so they can maintain a pretense in their call logs that they were disconnected, and then call back as soon as the next day. The collectors also used insulting and belittling language and engaged in intimidating behavior when calling.
  • Failed to provide legally mandated disclosures: The network did not provide people with statutorily-required notices, which detail their rights. When individuals asked for the notices, some collectors refused to provide them.

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Andy Spears is a middle Tennessee writer and policy advocate. He reports on news around public policy issues - education, health care, consumer protection, and more.

Nashville, TN

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