Collecto, Inc. d/b/a EOS CCA
Documents in this case
- Complaint · · 15 p.
- Consent order · · 24 p.
Case summary
CFPB filed a federal complaint against EOS CCA (EOS), a Massachusetts debt collection firm, for reporting and collecting on old cellphone debt that consumers disputed and EOS did not verify.
Complaint ()
PDF of this document (15 pages)
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UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSSETTS
Consumer Financial Protection Bureau,
Plaintiff, COMPLAINT v.
Collecto, Inc. d/b/a EOS CCA,
Defendant.
The Consumer Financial Protection Bureau (Bureau) files this Complaint against Collecto, Inc. d/b/a EOS CCA (EOS) and alleges as follows:
INTRODUCTION 1.
This case concerns EOS’s collections and credit-reporting practices on a $2.3 billion portfolio of old, previously collected telecommunications debt that an EOS subsidiary acquired from AT&T in 2012.
2.
EOS reported inaccurate information about the debts to credit-reporting agencies, and collected and continued to report debts that consumers disputed, even though EOS was unable to verify that the debts were still owed. Case 1:15-cv-14024 Document 1 Filed 12/07/15 Page 1 of 15
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3.
As a result, EOS violated the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681s-2, the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692 et seq., and the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531(a), 5536(a)(1).
JURISDICTION AND VENUE 4.
This Court has subject-matter jurisdiction over this action because it is brought under “Federal consumer financial law,” 12 U.S.C. § 5565(a)(1), presents a federal question, 28 U.S.C. § 1331, and is brought by an agency of the United States, 28 U.S.C. § 1345.
5.
Venue is proper in this district because a substantial part of the events or omissions giving rise to the claims occurred here and EOS’s principal place of business is located in this district. 28 U.S.C. §1391(b); 12 U.S.C. § 5564(f). PARTIES 6.
The Bureau is an agency of the United States created by the CFPA. It has independent litigating authority, including the authority to enforce FCRA, the FDCPA, and the CFPA. 12 U.S.C. §§ 5564(a)-(b), 5481(12), 5481(14). 7.
EOS is a corporation that maintains its principal place of business at 700 Longwater Drive, Norwell, MA 02061. At all times relevant to this Complaint, EOS regularly collected defaulted consumer debt related to a consumer-financial product or service, including telecommunications debt that was owed to companies that regularly extend credit by providing cell-phone service without requiring Case 1:15-cv-14024 Document 1 Filed 12/07/15 Page 2 of 15
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immediate payment; used instrumentalities of interstate commerce or the mails in a business the principal purpose of which is debt collection; and furnished information relating to consumers to one or more consumer-reporting agencies for inclusion in a consumer report. Accordingly, EOS is a “covered person” under the CFPA, 12 U.S.C. § 5481(6); see also 12 U.S.C. § 5481(5), (15)(A)(i), (15)(A)(x); a “debt collector” under the FDCPA, 15 U.S.C. § 1692a(6); and a furnisher subject to FCRA, 15 U.S.C. § 1681s-2.
FACTS 8.
EOS’s principal business is third-party debt collection, and it also has a wholly owned subsidiary, US Asset Management (USAM), which purchases defaulted consumer debt, including telecommunications debt. EOS serves as the exclusive collection agency for debt acquired by USAM.
The AT&T Portfolio 9.
In August 2012, USAM entered into an agreement with AT&T to purchase a portfolio of over three million defaulted telecommunications accounts with a face value of $2.34 billion (the AT&T Portfolio). USAM acquired the AT&T Portfolio for pennies on the dollar, paying $35.4 million for the debts. 10. In accordance with its customary practice, USAM entered into a collectionservices agreement with EOS for the collection of the AT&T Portfolio. Under the Case 1:15-cv-14024 Document 1 Filed 12/07/15 Page 3 of 15
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terms of that agreement, EOS agreed to remit money collected from consumers to USAM monthly, less fees and expenses.
11. The AT&T Portfolio was the largest debt portfolio ever purchased by USAM and collected by EOS.
12. The AT&T Portfolio consisted mainly of old accounts that AT&T had sent to multiple collection agencies.
EOS Reports the Entire AT&T Portfolio as Disputed 13. EOS knew from past experience collecting old, previously collected telecommunications debt that the AT&T Portfolio debts were likely to have inaccurate and incomplete dispute histories and documentation as well as other defects.
14. Shortly after acquiring the portfolio in August 2012, EOS reported every account in the AT&T Portfolio to the consumer-reporting agencies and reported all of the over three million accounts as disputed by the account holder, despite knowing that consumers had not disputed each of the accounts. 15. Numerous consumers contacted EOS about the dispute flags and informed the company that they had not disputed the debts. 16. A month after reporting the entire portfolio as disputed, EOS reversed course and deleted the dispute flags on AT&T Portfolio accounts unless it had specific information that the consumers had in fact disputed the debts. Case 1:15-cv-14024 Document 1 Filed 12/07/15 Page 4 of 15
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17. This about-face sparked more consumer calls to the company. Numerous consumers called to complain about the dispute flag being removed from their counts.
18. EOS flip-flopped again and reported all the AT&T Portfolio debts as disputed in early October 2012.
19. Finally, in late October 2012, EOS decided to delete the dispute histories on all of the AT&T Portfolio accounts and report them without dispute flags unless it had specific information that the consumer had, in fact, disputed the accounts. EOS’s Collection and Reporting of Disputed Accounts 20. At the same time EOS was going back and forth in reporting the AT&T Portfolio as disputed, it was obtaining additional information suggesting significant issues with the portfolio.
21. Among other things, EOS learned that, contrary to the sales agreement with AT&T, the portfolio contained time-barred debt, fraudulent debt, and debts consumers disputed as having been paid or settled. 22. In addition, when consumers contacted EOS to dispute or question a debt, EOS had difficulty getting AT&T to provide sufficient, and sometimes any, documentation to verify the debts.
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23. In January 2013, a senior EOS manager warned that the AT&T Portfolio likely contained significant numbers of time-barred, disputed, fraudulent, and settled or paid debts.
24. Notwithstanding the issues EOS encountered with the AT&T Portfolio, EOS continued to report and collect on the portfolio accounts. 25. It was not until June 2014 that EOS took steps to identify the portfolio accounts that potentially had been paid or settled. 26. To do so, EOS reviewed its internal records and dispute notifications from consumer-reporting agencies to find all the accounts in which a consumer complained that the account had been paid or settled or was suspected of having done so based on EOS’s internal call notes or dispute flags from the consumer-reporting agencies. 27. Because it lacked sufficient, and in some cases, any documentation to verify that those debts remained outstanding, EOS sent the list of potentially resolved accounts to AT&T to confirm whether those accounts had been paid. 28. AT&T reviewed only a subset of the accounts EOS provided and concluded that 20% of the accounts it reviewed had been paid or settled. AT&T did not, however, give EOS any information or documentation revealing whether the remaining accounts on EOS’s list were still outstanding. 29. To date, EOS has identified over 10,000 AT&T Portfolio accounts that may have been previously paid or resolved.
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30. EOS does not have sufficient, or in some cases, any documentation from AT&T to refute consumers’ claims that the vast majority of these accounts have been paid or resolved.
31. EOS initially reported over 9,700 of these accounts to consumer-reporting agencies. Although EOS has since processed deletion requests for many of these accounts, EOS continues to report over 1,900 of these accounts as past due even though consumers have disputed the accounts as resolved and EOS lacks any documentation to demonstrate otherwise.
32. EOS also has identified other accounts that were disputed by consumers for various reasons but later paid. EOS sought and took payment on those accounts even though it did not—and does not—have sufficient information from AT&T to substantiate the debts.
33. In total, EOS also has collected about $743,000 on over 2,000 accounts that consumers have disputed and EOS is unable to verify remain outstanding. COUNT I (Inaccurate Reporting in Violation of the FCRA) 34. The Bureau realleges and incorporates by reference paragraphs 1 through 33.
35. Section 623(a)(1)(A) of the FCRA, 15 U.S.C. § 1681s-2(a)(1)(A), prohibits a person from furnishing any information relating to a consumer to any consumer- Case 1:15-cv-14024 Document 1 Filed 12/07/15 Page 7 of 15
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reporting agency if the person knows or has reasonable cause to believe that the information is inaccurate.
36. Section 623(a)(2) of the FCRA, 15 U.S.C. § 1681s-2(a)(2), provides that a person who (A) regularly and in the ordinary course of business furnishes information to one or more consumer-reporting agency about the person’s transactions or experiences with any consumer, and (B) has furnished to a consumer-reporting agency information that the person determines is not complete and accurate, shall promptly notify the consumer-reporting agency of that determination and provide to the agency any corrections to that information, or any additional information, that is necessary to make the information provided by the person to the agency complete and accurate, and shall not thereafter furnish to the agency any of the information that remains incomplete or inaccurate.
37. EOS regularly and in the ordinary course of business furnishes information to one or more consumer-reporting agency.
38. EOS twice reported as disputed every account in the AT&T Portfolio to the consumer-reporting agencies, once in August 2012 and again in October 2012. 39. EOS had no information or reasonable cause to believe that all of the more than three million accounts in the AT&T Portfolio had been disputed by consumers, and it had already determined the information was not complete and accurate. Case 1:15-cv-14024 Document 1 Filed 12/07/15 Page 8 of 15
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40. Indeed, after reporting all the debts as disputed in August 2012, EOS learned from numerous consumers that they had not disputed the debts. EOS nonetheless failed to correct the information it had previously reported and in fact reported all AT&T portfolio debts as disputed a second time in October 2012. 41. In reporting all the AT&T Portfolio debts as disputed, EOS furnished information relating to consumers to consumer-reporting agencies that EOS knew or had reasonable cause to believe was inaccurate. 42. In addition, EOS failed to correct previously furnished information that EOS determined was inaccurate, and it thereafter again furnished information that remained inaccurate.
43. EOS thus violated § 623(a)(1)(A) and (a)(2) of the FCRA, 15 U.S.C. § 1681s-2(a)(1)(A), (a)(2).
COUNT II (Inaccurate Reporting Violated the FDCPA) 44. The Bureau realleges and incorporates by reference paragraphs 1 through 33.
45. EOS is a “debt collector” under the FDCPA. 15 U.S.C. § 1692a(6). 46. Section 807 of the FDCPA, 15 U.S.C. § 1692e, prohibits debt collectors from using any false, deceptive, or misleading representation or means in connection with the collection of any debt.
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47. Section 807(2)(A) of the FDCPA, 15 U.S.C. § 1692(2)(A), specifically prohibits false representations of the character, amount, or legal status of any debt. 48. Section 807(8) of the FDCPA, 15 U.S.C. § 1692e(8), further bars debt collectors from communicating to any person, including consumer-reporting agencies, information that they know or should know to be false. 49. EOS twice reported as disputed every account in the AT&T Portfolio to the consumer-reporting agencies, even though it knew or should have known that not all of the over three million portfolio debts had been disputed by consumers. 50. EOS’s reporting of all the AT&T Portfolio debts as disputed was a false, misleading, and deceptive act in violation of § 807 of the FDCPA, 15 U.S.C. § 1692e, (2)(A), (8).
COUNT III (Deception under the CFPA in Reporting and Collecting Disputed Debts)
51. The Bureau realleges and incorporates by reference paragraphs 1 through 33.
52. An act or practice is deceptive under the CFPA if it involves a material misrepresentation that misleads, or is likely to mislead, a consumer acting reasonably under the circumstances.
53. In reporting, collecting, and attempting to collect AT&T Portfolio debts from consumers, EOS represented, directly or indirectly, expressly or by implication, Case 1:15-cv-14024 Document 1 Filed 12/07/15 Page 10 of 15
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that the consumers owed those debts and that EOS had a reasonable basis for claiming such debts were owed by the consumers.
54. In fact, in numerous instances those representations were false and misleading, or not substantiated at the time they were made. 55. EOS continued to represent that consumers owed the amounts claimed on particular accounts even after learning that AT&T Portfolio contained unreliable data with respect to some accounts, including previously paid or settled accounts. EOS has failed to obtain information that would have been necessary to conclude the accounts remained due.
56. Moreover, in numerous instances, EOS continued to report as delinquent certain debts that consumers disputed and challenged, including those that consumers said they previously paid or settled, even though EOS lacked the information necessary to have a reasonable basis to report those debts remained outstanding. 57. Further, in numerous instances, EOS collected debts that consumers disputed and challenged even though EOS did not have the information necessary to have reasonable basis to believe those debts remained outstanding. 58. These misrepresentations were material because they were likely to affect consumers’ responses to allegedly outstanding debts and were likely to mislead consumers acting reasonably under the circumstances to pay debts they do not owe or have no obligation to pay.
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59. Accordingly, EOS’s reporting and collection of debts consumers disputed, including the debts consumers stated they paid or settled, were false or misleading and constitute deceptive acts or practices in violation of §§ 1031(a) and 1036(a) of the CFPA, 12 U.S.C. §§ 5531(a), 5536(a).
COUNT IV (Deception under the FDCPA in Reporting and Collecting Disputed Debts)
60. The Bureau realleges and incorporates by reference paragraphs 1 through 33.
61. Section 807 of the FDCPA, 15 U.S.C. § 1692e, prohibits debt collectors from using any false, deceptive, or misleading representation or means in connection with the collection of any debt.
62. Section 807(2)(A) of the FDCPA, 15 U.S.C. § 1692e(2)(A), specifically prohibits debt collectors from making false representations of the character, amount, or legal status of any debt.
63. Section 807(8) of the FDCPA, 15 U.S.C. § 1692e(8), also bars debt collectors from communicating to any person, including consumer-reporting agencies, information that they know or should know to be false. 64. Section 807(10) of the FDCPA, 15 U.S.C. § 1692e(10), further prohibits debt collectors from using false representations or deceptive means to collect or attempt to collect any debt.
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65. In reporting, collecting, and attempting to collect AT&T Portfolio debts from consumers, EOS represented, directly or indirectly, expressly or by implication, that the consumers owed those debts and that EOS had a reasonable basis for claiming such debts were owed by the consumers. 66. In fact, in numerous instances these representations were false or were not substantiated at the time they were made.
67. Specifically, EOS reported and collected debts that consumers disputed and challenged, including debts that consumers challenged as paid or settled, even though EOS failed to obtain or review information necessary to have a reasonable basis to conclude those debts remained outstanding. 68. These representations were false or misleading and constitute deceptive acts and practices in violation of § 807 of the FDCPA, 15 U.S.C. § 1692e, (2)(A), (8), (10).
COUNT V (Violations of FCRA and the FDCPA Violate the CFPA)
69. The Bureau realleges and incorporates by reference paragraphs 1 through 33.
70. EOS’s violations of FCRA and the FDCPA, described in Counts I-II & IV, constitute violations of § 1036 of the CFPA. 12 U.S.C. § 5536(a)(1)(A).
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DEMAND FOR RELIEF The Bureau requests that the Court: 1.
permanently enjoin Defendant from committing future violations of the CFPA, 12 U.S.C. §§ 5531, 5536, or any other provision of “Federal consumer financial law,” as defined by 12 U.S.C. § 5481(14); 2.
grant additional injunctive relief as the Court may deem to be just and proper;
3.
award damages and other monetary relief against Defendant; 4.
order Defendant to pay redress to harmed consumers; 5.
order disgorgement of ill-gotten gains against Defendant; 6.
award civil money penalties against Defendant; 7.
award costs against Defendant; and 8.
award additional relief as the Court may determine to be just and proper. Dated: December 7, 2015 Respectfully submitted, ANTHONY ALEXIS Acting Enforcement Director JEFFREY PAUL EHRLICH Deputy Enforcement Director NATALIE R. WILLIAMS Assistant Litigation Deputy
/s/ Christina S. Coll CHRISTINA S. COLL (CA Bar No. 250712) Enforcement Attorney Case 1:15-cv-14024 Document 1 Filed 12/07/15 Page 14 of 15
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Consumer Financial Protection Bureau 301 Howard Street, Suite 1200 San Francisco, CA 94105 Phone: (202) 435-7843 Fax: (415) 844-9788 Email: [email protected]
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Consent order ()
PDF of this document (24 pages)
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UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSSETTS
Consumer Financial Protection Bureau,
Plaintiff,
Case No. 1:15-cv-14024
v.
STIPULATED FINAL Collecto, Inc. d/b/a EOS CCA, JUDGMENT AND ORDER
Defendant.
The Consumer Financial Protection Bureau (Bureau) commenced this civil action on December 7, 2015 to obtain consumer redress, injunctive relief, civil penalties, and other relief, from Collecto, Inc. d/b/a EOS CCA (EOS). The Complaint alleges violations of §§ 1031(a) and 1036(a)(1) of the Consumer Financial Protection Act of 2010, 12 U.S.C. §§ 5531(a), 5536(a)(1), violations of the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681s-2, and violations of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692e, in connection with EOS’s reporting and collecting of certain debts.
The parties, by and through respective counsel, have requested the Court to enter this Stipulated Final Judgment and Order (Order) to resolve all matters in Case 1:15-cv-14024 Document 2-1 Filed 12/07/15 Page 1 of 24
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dispute arising from the conduct alleged in the Complaint to the date this Order is entered.
FINDINGS AND CONCLUSIONS 1.
This Court has jurisdiction over the parties and the subject matter of this action.
2.
The Parties agree to entry of this Order, without adjudication of any issue of fact or law, to settle and resolve all matters in dispute arising from the conduct alleged in the Complaint.
3.
EOS neither admits nor denies any allegations in the Complaint, except as specifically stated in this Order. For the purposes of this Order, EOS admits the facts necessary to establish the Court’s jurisdiction over it and the subject matter of this action.
4.
EOS waives service under Rule 4(d) of the Federal Rules of Civil Procedure and waives all rights to seek judicial review or otherwise challenge or contest the validity of this Order. EOS also waives any claim it may have under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action to the date of this Order. Each party will bear its own costs and expenses, including, without limitation, attorneys’ fees.
5.
Entry of this Order is in the public interest.
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DEFINITIONS The following definitions apply to this Order: 6.
“AT&T Portfolio” means the portfolio of defaulted accounts purchased by US Asset Management (USAM), EOS’s wholly owned subsidiary, from AT&T in August 2012.
7.
“AT&T Portfolio Debt” means an individual account included in the AT&T Portfolio.
8.
“Board” means EOS’s duly-elected and acting U.S. Board of Directors. 9.
“Charge-off” means the treatment of a receivable balance by a Creditor as a loss or expense because payment is unlikely. 10.
“Charge-off Balance” means the amount alleged due on an account receivable at the time of Charge-off.
11.
“Creditor” means any person who offers or extends credit creating a debt or to whom a debt is owed, but not a person who receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another.
12.
“Disputed Portfolio Debt” means any AT&T Portfolio Debt whose accuracy or validity was disputed by a consumer, either orally or in writing, to EOS, its agents or assigns, USAM or a consumer reporting agency. Case 1:15-cv-14024 Document 2-1 Filed 12/07/15 Page 3 of 24
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13.
“Effective Date” means the date on which the Order is entered on the docket.
14.
“Enforcement Director” means the Assistant Director of the Office of Enforcement for the Consumer Financial Protection Bureau, or his or her delegee. 15.
“EOS” or “Defendant” means Collecto, Inc. d/b/a EOS CCA and its successors and assigns.
16.
“Original Account-Level Documentation” means a.
any documentation that a creditor or its agent (such as a servicer) provided to a consumer about a debt; or b.
the complete transactional history of a debt, created by a creditor or its agent (such as a servicer); or c.
a copy of a judgment, awarded to a creditor or entered on or before the Effective Date.
17.
“Related Consumer Action” means a private action by or on behalf of one or more consumers or an enforcement action by another governmental agency brought against EOS based on substantially the same facts as alleged in the Complaint.
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18.
“Restitution Eligible Consumers” means any consumer who paid a Disputed Portfolio Debt that EOS did not substantiate with Original Account-Level Documentation.
ORDER I.
CONDUCT PROVISIONS IT IS THEREFORE ORDERED that, 19.
EOS and its officers, agents, servants, employees, and attorneys who have actual notice of this Consent Order, whether acting directly or indirectly, may not violate §§ 1031(a) and 1036(a)(1) of the Consumer Financial Protection Act of 2010, 12 U.S.C. §§ 5531(a), 5536(a)(1); the Fair Debt Collection Practices Act, 15 U.S.C. § 1692e; and the Fair Credit Reporting Act, 15 U.S.C. § 1681s-2(a). 20.
For each Disputed Portfolio Debt that EOS has not substantiated with Original Account-Level Documentation as of the Effective Date, within 30 days of the Effective Date, EOS must submit a request to any consumer reporting agencies to which EOS is reporting the Disputed Portfolio Debt to remove all related tradelines and further is permanently enjoined from:
a.
furnishing information about the Disputed Portfolio Debt to third parties, including consumer-reporting agencies; b.
engaging in any collection activity with respect to the Disputed Portfolio Debt;
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c.
accepting any payments on the Disputed Portfolio Debt; and d.
reselling the Disputed Portfolio Debt.
21.
EOS and its officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with any of them in collecting a debt purchased by USAM, EOS, or any other EOS affiliate or subsidiary, who receive actual notice of this Consent Order, whether acting directly or indirectly, are restrained and prohibited from making any representation, expressly or by implication, that a consumer owes a debt or as to the amount of a debt owed or allegedly owed unless, at the time of making the representation, EOS can substantiate the representation. Without limiting the foregoing, for 5 years from the Effective Date, such substantiation must include reviewing Original Account-Level Documentation reflecting the consumer’s name and the claimed amount, excluding any post Charge-off or post-judgment payments (unless the claimed amount is higher than the Charge-off Balance or judgment balance, in which case EOS must review (i) Original Account-Level Documentation reflecting the Charge-off Balance or judgment balance and (ii) an explanation of how the claimed amount was calculated and why such increase is authorized by the agreement creating the debt or permitted by law), under any of the following circumstances: a.
the consumer disputed, orally or in writing, the accuracy or validity of the debt;
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b.
the debt was purchased, after the Effective Date, through a purchase agreement without meaningful and effective representations and warranties as to the accuracy or validity of the debt;
c.
the debt was purchased, after the Effective Date, through a purchase agreement without meaningful and effective commitments to provide Original Account-Level Documentation during the time period in which EOS is collecting the debt; or d.
the debt was purchased in a portfolio which EOS knows contains unsupportable or materially inaccurate information about any debt, based on either of the following factors: i at any time during the preceding twelve months, a Consumer disputed, orally or in writing, the accuracy or validity of a debt in the portfolio and EOS sought but was unable to obtain Original Account-Level Documentation reflecting the amount of the debt or the identity of the person responsible for the debt, unless EOS can establish, based on a documented and thorough review of Original Account-Level Documentation concerning other accounts in the portfolio, that the inability to obtain Original Case 1:15-cv-14024 Document 2-1 Filed 12/07/15 Page 7 of 24
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Account-Level Documentation to support the account in the portfolio was an anomaly; or ii Original Account-Level Documentation produced to EOS, by a debt seller or a consumer, reflected information about the amount of the debt or the identity of the person responsible for the debt that was inconsistent and irreconcilable with information previously provided to EOS by the debt seller, unless EOS can establish, based on a documented and thorough review of Original Account- Level Documentation concerning other accounts in the portfolio, that the production of inaccurate or inconsistent information concerning the account in the portfolio was an anomaly.
Notwithstanding the foregoing, and except as provided in Paragraph 20 of this Order, EOS is not required by this paragraph to (i) refuse to accept any payments voluntarily submitted by consumers; (ii) suspend collections for consumers who have acknowledged the debt and agreed to make payments; or (iii) refuse to communicate with a consumer who affirmatively contacts EOS (or its agents) or requests contact from EOS (or its agents) to discuss the consumer’s account. Case 1:15-cv-14024 Document 2-1 Filed 12/07/15 Page 8 of 24
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22.
For 5 years from the Effective Date, EOS and its officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with any of them, who receive actual notice of this Consent Order, whether acting directly or indirectly, are restrained and prohibited from reselling debt to anyone other than (i) the entity that initially sold the debt to EOS or to the Creditor, (ii) to a subsidiary or affiliate of EOS that is subject to the terms of this Consent Order (either by operation of law or by agreement), (iii) to any entity that is subject to the terms of this Consent Order as part of an acquisition or merger with EOS, or purchase of all or substantially all of EOS’s assets, or (iv) EOS’s (or its affiliates) creditors or any agent of such creditors (in each case, solely in their capacity as such) in settlement or satisfaction of any claims under, or in connection with the default or remedial provisions of, any relevant loan or lending agreement. II.
COMPLIANCE PLAN IT IS FURTHER ORDERED that:
23.
Within 60 days from the Effective Date, EOS must submit to the Enforcement Director for review and determination of non-objection a comprehensive compliance plan designed to ensure that EOS's debt collection, debtbuying and credit reporting activities comply with the terms of this Consent Order (Compliance Plan). The Compliance Plan must include, at a minimum: Case 1:15-cv-14024 Document 2-1 Filed 12/07/15 Page 9 of 24
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a.
detailed steps for addressing each action required by this Consent Order; and b.
specific timeframes and deadlines for implementation of those steps.
24.
The Enforcement Director will have the discretion to make a determination of non-objection to the Compliance Plan or direct EOS to revise it. In the event that the Enforcement Director directs EOS to revise the Compliance Plan, EOS must make the revisions and resubmit the Compliance Plan to the Enforcement Director within 30 days.
25.
After receiving notification that the Enforcement Director has made a determination of non-objection to the Compliance Plan, EOS must implement and adhere to the steps, recommendations, deadlines, and timeframes outlined in the Compliance Plan.
26.
Notwithstanding the foregoing, EOS must take whatever steps necessary to fully implement all of the requirements and restrictions described in Paragraphs 21- 22 within 60 days of the Effective Date.
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III.
ROLE OF THE BOARD IT IS FURTHER ORDERED that:
27.
The Board must review all submissions (including plans, reports, programs, policies, and procedures) required by this Consent Order before they are submitted to the Bureau.
28.
Although this Consent Order requires EOS to submit certain documents for the review or non-objection by the Enforcement Director, the Board must have the ultimate responsibility for proper and sound management of EOS and for ensuring that EOS complies with applicable Federal Consumer financial law and this Consent Order.
29.
In each instance that this Consent Order requires the Board to ensure adherence to, or undertake to perform certain obligations of EOS, the Board must: a.
authorize whatever actions are necessary for EOS to fully comply with the Consent Order;
b.
require timely reporting by EOS’s management to the Board on the status of EOS’s compliance with the Consent Order; and c.
require timely and appropriate corrective action to remedy any material non-compliance with any failures to comply with Board directives related to this Section.
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IV.
ORDER TO PAY REDRESS IT IS FURTHER ORDERED that:
30.
Within 30 days of the Effective Date, EOS must reserve or deposit into a segregated deposit account an amount not less than $743,000 for the purpose of providing redress to Restitution Eligible Consumers under this Order. This amount represents the minimum amount of redress EOS must provide to Restitution Eligible Consumers. EOS must refund all payments made to it, directly or indirectly, by Restitution Eligible Consumers with respect to any Disputed Portfolio Debt, including any interest and fees, regardless of whether the total redress due Restitution Eligible Consumers exceeds $743,000.
31.
Within 30 days of the Effective Date, EOS must submit to the Enforcement Director for review and non-objection a comprehensive written plan for providing redress consistent with this Order (Redress Plan). The Enforcement Director will have the discretion to make a determination of non-objection to the Redress Plan or direct EOS to revise it. If the Enforcement Director directs EOS to revise the Redress Plan, EOS must make the revisions and resubmit the Redress Plan to the Enforcement Director within 30 days. After receiving notification that the Enforcement Director has made a determination of non-objection to the Redress Plan, EOS must implement and adhere to the steps, recommendations, deadlines, and timeframes outlined in the Redress Plan.
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32.
The Redress Plan must include (1) the form of the letter (Redress Notification Letter) to be sent notifying Restitution Eligible Consumers of the redress; and (2) the form of the envelope that will contain the Redress Notification Letter. The letter must explain how the redress amount was calculated; that the provision of refund payment is in accordance with the terms of this Order; and that the consumer will not be subject to any new debt collection or credit-reporting activities for that debt. EOS must not include in any envelope containing a Redress Notification Letter any materials other than the approved letter and redress check, unless EOS has obtained written confirmation from the Enforcement Director that the Bureau does not object to the inclusion of such additional materials. 33.
The Redress Plan must also include a description of the: a.
methods used to identify all Restitution Eligible Consumers; b.
methods used to calculate the amount of redress to be paid to each Restitution Eligible Consumer as required herein; c.
procedures for issuance and tracking of redress to Restitution Eligible Consumers;
d.
procedures for monitoring compliance with the Redress Plan; e.
process for providing restitution for Restitution Eligible Consumers, which must include:
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i EOS mailing a check to any Restitution Eligible Consumer along with a Redress Notification Letter; ii EOS sending the check by United States Postal Service first-class mail, address correction service requested, to the Restitution Eligible Consumer’s last address as maintained by EOS’s records;
iii EOS using best efforts to obtain a current address for any Restitution Eligible Consumer whose Redress Notification Letter and restitution check is returned for any reason, using the National Change of Address System, and promptly re-mailing all returned letters and restitution checks to current addresses. If the check for any Restitution Eligible Consumer is returned to EOS after such second mailing by EOS, or if a current mailing address cannot be identified using National Change of Address System, EOS must retain the restitution amount of such Eligible Consumer for a period of three-hundred sixty (360) days from the date the restitution check was originally mailed, during which period such amount may be claimed by such Case 1:15-cv-14024 Document 2-1 Filed 12/07/15 Page 14 of 24
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Restitution Eligible Consumer upon appropriate proof of identity.
34.
After completing the Redress Plan, if the amount of redress provided to Restitution Eligible Consumers is less than $743,000, within 30 days of the completion of the Redress Plan, EOS must pay to the Bureau, by wire transfer to the Bureau or to the Bureau’s agent, and according to the Bureau’s wiring instructions, the difference between the amount of redress provided to Restitution Eligible Consumers and $743,000.
35.
If the Bureau determines, in its sole discretion, that additional redress to Restitution Eligible Consumers is wholly or partially impracticable or otherwise inappropriate, any funds not used for such equitable relief will be deposited in the U.S. Treasury as disgorgement. EOS will have no right to challenge any actions that the Bureau or its representatives may take under this paragraph. 36.
EOS may not condition the payment of any redress to any Restitution Eligible Consumer under this Order on that consumer waiving any right. 37.
Within 90 days of completing the Redress Plan, EOS will submit to the Enforcement Director for review a report detailing how it identified accounts for redress and paid redress on those identified accounts.
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V.
ORDER TO PAY CIVIL MONEY PENALTIES IT IS FURTHER ORDERED that, 38.
By reason of the violations of law alleged in the complaint, and based on the factors set forth in § 1055(c)(3) of the CFPA, 12 U.S.C. § 5565(c)(3), a judgment for a civil money penalty is hereby entered in favor of the Bureau and against EOS in the amount of $1,850,000.
39.
Within 30 days of the Effective Date, EOS must pay the civil money penalty by wire transfer to the Bureau or to the Bureau’s agent in compliance with the Bureau’s wiring instructions.
40.
The civil money penalty paid under this Order will be deposited in the Civil Penalty Fund of the Bureau as required by § 1017(d) of the CFPA, 12 U.S.C. § 5497(d).
41.
EOS must treat the civil money penalty paid under this Order as a penalty paid to the government for all purposes. Regardless of how the Bureau ultimately uses those funds, EOS may not:
a.
claim, assert, or apply for a tax deduction, tax credit, or any other tax benefit for any civil money penalty paid under this Order; or b.
seek or accept, directly or indirectly, reimbursement or indemnification from any source, including but not limited to Case 1:15-cv-14024 Document 2-1 Filed 12/07/15 Page 16 of 24
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payment made under any insurance policy, with regard to any civil money penalty paid under this Order.
42.
To preserve the deterrent effect of the civil money penalty in any Related Consumer Action, EOS may not argue that it is entitled to, nor may EOS benefit by, any offset or reduction of any monetary remedies imposed in the Related Consumer Action because of the civil money penalty paid in this action (Penalty Offset). If the court in any Related Consumer Action grants such a Penalty Offset, EOS must, within 30 days after entry of a final order granting the Penalty Offset, notify the Bureau, and pay the amount of the Penalty Offset to the U.S. Treasury. Such a payment will not be considered an additional civil money penalty and will not change the amount of the civil money penalty imposed in this action. VI.
ADDITIONAL MONETARY PROVISIONS IT IS FURTHER ORDERED that:
43.
In the event of any default on EOS’s obligations to make payment under this Order, interest, computed under 28 U.S.C. § 1961, as amended, will accrue on any outstanding amounts not paid from the date of default to the date of payment, and will immediately become due and payable.
44.
EOS must relinquish all dominion, control, and title to the funds paid to the fullest extent permitted by law and no part of the funds may be returned to EOS. Case 1:15-cv-14024 Document 2-1 Filed 12/07/15 Page 17 of 24
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45.
Under 31 U.S.C. § 7701, EOS, unless it already has done so, must furnish to the Bureau its taxpayer identifying numbers, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order.
46.
Within 30 days of the entry of a final judgment, consent order, or settlement in a Related Consumer Action, EOS must notify the Enforcement Director of the final judgment, consent order, or settlement in writing. That notification must indicate the amount of redress, if any, that EOS paid or is required to pay to consumers and describe the consumers or classes of consumers to whom that redress has been or will be paid.
VII.
REPORTING REQUIREMENTS IT IS FURTHER ORDERED that, 47.
For 5 years from the Effective Date, EOS must notify the Bureau of any development that may affect EOS’s compliance obligations arising under this Order, including but not limited to, a dissolution, assignment, sale, merger, or other action that would result in the emergence of a successor company; the creation or dissolution of a subsidiary, parent, or affiliate that engages in any acts or practices subject to this Order; the filing of any bankruptcy or insolvency proceeding by or against EOS; or a change in EOS’s name or address. EOS must provide this notice at Case 1:15-cv-14024 Document 2-1 Filed 12/07/15 Page 18 of 24
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least 30 days before the development or as soon as practicable after the learning about the development, whichever is sooner.
48.
Within 7 days of the Effective Date, EOS must designate at least one telephone number and email, physical, and postal address as points of contact, which the Bureau may use to communicate with EOS. EOS must also designate someone, providing a name, email, and physical address, who will accept service of process for EOS.
49.
EOS must report any change in the information required to be submitted under Paragraph 48 at least 30 days before the change or as soon as practicable after learning about the change, whichever is sooner. 50.
Within 60 days of receiving notification that the Enforcement Director has made a determination of non-objection to the Compliance Plan, and again one year after the Effective Date, EOS must submit to the Enforcement Director an accurate written compliance progress report (Compliance Report) that has been approved by the Board, which, at a minimum: a.
describes in detail the manner and form in which EOS has complied with this Order; and b.
attaches a copy of each order acknowledgment obtained under Section VIII, unless previously submitted to the Bureau. Case 1:15-cv-14024 Document 2-1 Filed 12/07/15 Page 19 of 24
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51.
After the one-year period, and for 4 years thereafter, EOS must submit to the Enforcement Director additional Compliance Reports within 14 days of receiving a written request from the Bureau. VIII.
ORDER DISTRIBUTION AND ACKNOWLEDGMENT IT IS FURTHER ORDERED that, 52.
Within 30 days of the Effective Date, EOS must deliver a copy of this Order to each of its Board members and executive officers, as well as to any managers, employees, or other agents and representatives who have responsibilities related to the subject matter of the Order.
53.
For 5 years from the Effective Date, EOS must deliver a copy of this Order to any business entity resulting from any change in structure referred to in Section VII, any future board members and executive officers, as well as to any managers, employees, or other agents and representatives who will have responsibilities related to the subject matter of the Order before they assume their responsibilities.
54.
EOS must secure a signed and dated statement acknowledging receipt of a copy of this Order, ensuring that any electronic signatures comply with the requirements of the E-Sign Act, 15 U.S.C. § 7001 et seq., within 45 days of delivery, from all persons receiving a copy of this Order under this Section. Case 1:15-cv-14024 Document 2-1 Filed 12/07/15 Page 20 of 24
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IX.
RECORDKEEPING IT IS FURTHER ORDERED that, 55.
EOS must preserve and create, for at least 5 years from the Effective Date, the following business records:
a.
All documents and records necessary to demonstrate full compliance with each provision of this Order, as well as all submissions to the Bureau.
b.
All documents and records pertaining to the Redress Plan, described in Section IV.
56.
EOS must retain the documents identified in Paragraph 55 for at least 5 years.
57.
EOS must make the documents identified in Paragraph 55 available to the Bureau upon the Bureau’s request.
X.
NOTICES IT IS FURTHER ORDERED that, 58.
Unless otherwise directed in writing by the Bureau, EOS must provide all submissions, requests, communications, or other documents relating to this Order in writing, with the subject line, “Consumer Financial Protection Bureau v. Collecto, Inc. d/b/a EOS CCA, Case No. 2013-0829-02,” and send them either: Case 1:15-cv-14024 Document 2-1 Filed 12/07/15 Page 21 of 24
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a.
By overnight courier (not the U.S. Postal Service), as follows: Assistant Director for Enforcement Consumer Financial Protection Bureau 1625 Eye Street NW ATTN: Office of Enforcement Washington, DC 20006; or
b.
By first-class mail to the address in Paragraph 58(a) and contemporaneously by email to [email protected].
XI.
COOPERATION WITH THE BUREAU IT IS FURTHER ORDERED that, 59.
EOS must cooperate fully to help the Bureau determine the identity and location of, and the amount of injury sustained by, each Restitution Eligible Consumer. EOS must provide such information in its or its agents’ possession or control within 14 days of receiving a written request from the Bureau. 60.
EOS must cooperate fully with the Bureau in this matter and in any investigation related to or associated with the conduct described in the Complaint. EOS must provide truthful and complete information, evidence, and testimony. EOS must cause EOS’s officers, employees, representatives, or agents to appear for interviews, discovery, hearings, trials, and any other proceedings that the Bureau may reasonably request upon 14 days written notice, or other reasonable notice, at such Case 1:15-cv-14024 Document 2-1 Filed 12/07/15 Page 22 of 24
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places and times as the Bureau may designate, without the service of compulsory process.
XII.
COMPLIANCE MONITORING IT IS FURTHER ORDERED that, to monitor EOS’s compliance with this Order, 61.
For 5 years from the Effective Date, within 14 days of receipt of a written request from the Bureau, EOS must submit additional compliance reports or other requested information, which must be made under penalty of perjury; provide sworn testimony; or produce documents.
62.
EOS must permit Bureau representatives to interview any employee or other person affiliated with EOS who has agreed to such an interview. The person interviewed may have counsel present.
63.
Nothing in this Order will limit the Bureau’s lawful use of compulsory process, under 12 C.F.R. § 1080.6 or otherwise. XIII.
RELEASE 64.
The Bureau releases and discharges EOS from all potential liability for law violations that the Bureau has or might have asserted based on the practices alleged in the Complaint, to the extent such practices occurred before the Effective Date of this Order and the Bureau knows about them as of the Effective Date of this Order. Notwithstanding this release, the Bureau may use the practices alleged in the Case 1:15-cv-14024 Document 2-1 Filed 12/07/15 Page 23 of 24
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Complaint in future enforcement actions against EOS or its affiliates to establish a pattern or practice of violations or the continuation of a pattern or practice of violations or to calculate the amount of any penalty. This release does not preclude or affect any right of the Bureau to determine and ensure compliance with the Order, or to seek penalties for any violations of the Order. XIV.
RETENTION OF JURISDICTION 65.
The Court will retain jurisdiction of this matter for purposes of construction, modification, and enforcement of this Order.
IT IS SO ORDERED.
DATED this ___ day of ______________, 2015.
______________________________________________
United States District Court Judge Case 1:15-cv-14024 Document 2-1 Filed 12/07/15 Page 24 of 24