New York Fines Two Firms Over Improper Debt Collections
NEW YORK, May 8 (Reuters) - Two consumer debt-buying firms have agreed to pay fines, and to stop pursuing $16 million of judgments against New York borrowers, to resolve allegations that they repeatedly brought improper debt collection actions.
Both firms specialize in buying defaulted debt, such as on credit cards, from lenders, and then try to collect in court. The debt often costs just a few cents on the dollar, in part because of uncertainty over whether sums owed will be repaid.
Neither firm immediately responded to requests for comment. Their payments include civil penalties and costs.
Schneiderman is among various federal and state regulators seeking to curb alleged debt collection abuses.
In 2013 the U.S. Consumer Financial Protection Bureau sought comments on how to better regulate the industry, and address consumer concerns such as intimidating collection tactics, misstating sums owed, and misleading people abut how repayments might affect credit scores.
According to Schneiderman, Portfolio Recovery Services and Sherman Financial would obtain default judgments against New York consumers who did not respond to their lawsuits, even though deadlines to pursue recoveries had already passed.