By Andrew A. Turner, J.D.
The Consumer Financial Protection Bureau announced that it has reached a settlement with National Credit Adjusters, LLC (NCA), a privately-held company headquartered in Kansas, and its former CEO and part-owner, Bradley Hochstein. The order imposes a judgment for civil money penalties of $3 million against NCA and $3 million against Hochstein. Full payment of those amounts is suspended subject to NCA paying a $500,000 civil money penalty and Hochstein paying a $300,000 civil money penalty.
As described in the consent order, the CFPB found that NCA and Hochstein used a network of debt collection companies to collect consumer debt on NCA’s behalf. Some of those companies engaged in unlawful debt collection acts, including representing that consumers owed more than they were legally required to pay and threatening consumers and their family members with lawsuits, visits from process servers, and arrest, when neither NCA nor the collection companies had the legal authority to take those actions.
The CFPB found that NCA and Hochstein continued placing debt with those companies for collection with knowledge or reckless disregard of the companies’ illegal consumer debt collection practices. They also sold millions in consumer debt to those companies with knowledge or reckless disregard of the company’s illegal consumer debt collection practices. Between 2011 and 2015, NCA sold more than $700 million in consumer debt portfolios to the companies.
The CFPB charged NCA and Hochstein with violating the Consumer Financial Protection Act and also charged NCA with violating the Fair Debt Collection Practices Act. Under the terms of the consent order, NCA and Hochstein are barred from certain collection practices and Hochstein is permanently barred from working in any business that collects, buys, or sells consumer debt. NCA must submit a comprehensive compliance plan to the CFPB, designed to ensure that its future debt collection practices are in compliance with federal law.
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