Authorities Seek To Shutter ‘Predatory’ Debt Collectors

CFPB, New York AG say New York companies used ‘emotional terrorism’ tactics

Woman dejectedly looking at her phone

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There are lines that debt collectors aren’t allowed to cross, and authorities say falsely threatening debtors with arrest, using social media to launch smear campaigns against them, and harassing them with repeated insulting phone calls are among them. 

Key Takeaways

  • Federal and state authorities are asking a court to shutter a network of New York debt collection companies that generated numerous consumer complaints for allegedly using tactics that targets likened to “emotional terrorism.”
  • The methods included focusing on friends, relatives, and employers of debtors to turn them into an “army” that would pressure debtors to pay up. 
  • Debt collection is a major sore spot for consumers—authorities receive more complaints about collection firms than any other type of financial company besides credit bureaus.

Those were all tactics that a group of New York-based debt collection companies allegedly used against some 293,000 people between 2015 and 2020, drawing scrutiny from federal and state authorities who are on the brink of shutting the companies down. The government’s predatory lending watchdog, the Consumer Financial Protection Bureau, together with the New York state attorney general, asked a federal court this week to shutter six companies and ban their leaders from the debt collecting business entirely, settling a lawsuit filed in September 2020. The defendants have agreed to the stipulated judgment, which has yet to be approved by the court.

Debt collection is one of the biggest sources of grievance that consumers have about financial products and companies, according to the CFPB’s consumer complaint database—second only to credit reporting issues. As of Tuesday, nearly 68,000 people had filed complaints about debt collection over the past year, with most coming  because companies were attempting to collect debts that consumers did not owe. The six companies to be shut down were themselves a source of “numerous” complaints to authorities, and sparked more than 20 private lawsuits by people they attempted to collect debts from, according to the CFPB suit. 

“Predatory debt collectors make their profit by targeting hardworking consumers and then illegally saddle them deeper into debt,” New York Attorney General Letitia James said in a press release. “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.”

Scott A. Croce—the Buffalo-based chiropractor who co-owned the companies together with his wife, Susan Croce, and sales professional Christopher De Ri—did not respond to a request for comment left at his office. 

The companies, including JPL Recovery Solutions, Regency One Capital, and ROC Asset Solutions, all did business out of the same Getzville, New York, location, and operated by purchasing defaulted high-interest personal loans, payday loans, credit card debt, and other types of debt for “pennies on the dollar,” according to the CFPB. The companies then tried to collect the debt from consumers and between 2015 and 2020 generated gross revenue of about $93 million, the bureau said.

Pressuring Consumers by ‘Stirring the Pot’

The CFPB accused the companies of using aggressive and deceptive methods to collect debts, including an especially insidious tactic called “emotional terrorism” by the people it targeted. 

Employing the so-called circles approach, for example, collectors would use social media to find friends, acquaintances, and employers of debtors, and then call them instead of the debtor, pretending they were attempting to locate the debtor when in reality they already had their contact information. The callers would insinuate that the person was in some sort of trouble. 

“Stirring the pot” like this would often cause the third parties to call the consumer themselves.

“Thus, the consumer’s family, friends, and colleagues can serve as the collector’s ‘army,’ pressuring the consumer to address the collector’s demands,” the bureau said in the lawsuit.

Other times, collectors would falsely threaten debtors with arrest or wage garnishment, or bombard them with phone calls using demeaning and belittling language, the bureau said. 

In addition to having the companies shut down and barring their owners and managers from the debt collection business for life, the defendants will have to pay $4 million in penalties if the judge allows the stipulated judgment to go through.

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  1. Consumer Financial Protection Bureau. "CFPB and New York Attorney General Shut Down Debt Collection Ring."

  2. Consumer Financial Protection Bureau. "Consumer Complaint Database."

  3. Consumer Financial Protection Bureau. "Bureau of Consumer Financial Protection and the People of the State of New York, by

    Letitia James, Attorney General for the State of New York,  Plaintiffs, v. JPL Recovery Solutions [and other defendants]"

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