CFPB Orders Portfolio Recovery to Pay More than $24 Million (Part 1)

In March 2023, the Consumer Financial Protection Bureau announced that it was ordering Portfolio Recovery Associates (PRA) to pay millions to consumers. The Bureau stated that PRA had been engaging in numerous violations of law. And what made the order even more surprising is that PRA had already been fined in 2015 for other violations—so the debt collector had not only failed to clean up its act, but it doubled down with even more illegal activity, harassing consumers for debts, filing meritless lawsuits, and more.

Given that the Virginia-based PRA is one of the largest debt collectors in the nation, with a 2021 reported net income of more than $183 million, we’re going to delve into this order—in this first post by identifying PRA’s violations and then, in the following post, we’ll look at the steps PRA must take in response to this new order.

PRA’s 2015 Violations

In September 2015, the Bureau announced it was taking action against PRA for several illegal practices. These included:

  • Attempting to collect on an unsubstantiated or inaccurate debt
  • Filing suit against debtors without evidence to back up the claims, trusting they’d win because consumers wouldn’t defend the suits
  • Filing suit for debts after the statute of limitations had expired
  • Falsely claiming attorneys reviewed the debts and concluded PRA should sue the consumers
  • Making false statements to consumers regarding the existence of a debt

The Bureau ordered PRA to end these practices and pay $19 million in refunds to consumers and a penalty of $8 million. PRA also had to stop collecting another $3 million in pending actions.

PRA’s 2023 Violations

In the 2023 order, the Bureau reported that PRA violated the 2015 order and other Fair Credit Reporting Act provisions.

As in the past, PRA continued to attempt to collect debts without evidence of the debt’s validity. PRA continued to sue for debts, even though claims were time-barred by the statute of limitations.

According to the Bureau, “on at least tens of thousands of occasions,” PRA failed to resolve consumers’ disputes within the required period.

Additionally, PRA failed to conduct reasonable investigations if consumers said that the debt owed wasn’t theirs—it was the result of fraud or identity theft. PRA did not inform consumers about the result of investigations, and it did not supply documentation when requested by the consumers.

In our next post, we’ll discuss what the Bureau’s enforcement action means for consumers.