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Nov 16, 20227 min read

Portfolio Recovery Associates

Updated: Jul 3


Welcome to The Consumer Corner. This is a podcast that focuses on protecting the consumer from Corporate America.


One of the things we are going to talk about is different companies that have harmed consumers. Sometimes these stories will be newsworthy, other times they might fly under the radar so to speak.


In today’s episode, we will look at Portfolio Recovery Associates and the scandals that hurt its reputation over the years. We will also talk about some of the things they are doing today….right this minute to harm you, the consumer.


How Certain Companies are Harming American Consumers: Portfolio Recovery Associates and Their Troubles


Some American companies are causing more harm than good to their consumers. Many companies guarantee customer satisfaction, promise them good service, assure them of loyalty and then bind them into a contract, bleed them with fees and cheat them with fine print.


Obviously, many consumers end up becoming victims.


According to the article, Companies and the Customers Who Hate Them by Gail McGovern and Youngme Moon (2007), they explain that “some companies consciously and cynically exploit customers in this way.”


But in our conversations with dozens of executives in various industries, we found that the majority of firms that profit from their customers’ confusion have unwittingly fallen into a trap.


Without ever making a deliberate decision to do so, they have, over a period of years, taken greater advantage of their customers…. a company is less likely to help customers make good choices if it knows that it can generate more profits when they make poor ones.


Many firms have discovered just how profitable penalties can be; as a result, they have an incentive to encourage their customers to incur them—or, at least, not to discourage them from doing so.


A lot of companies want to make money without really considering how it will affect the consumers.


They are unconcerned with the dissatisfaction of consumers as long as they are generating huge profits.


Where is the loyalty they preach?


Let’s take a look at Portfolio Recovery Associates, known as PRA, and how their actions have caused harm to their customers.


Portfolio Recovery Associates


  • Founded in 1996

  • is one of the largest collection agencies in the US.


What they do…


  • Buys collection accounts primarily from credit card issuers, for 4 to 10 cents on the dollar, maybe less.

  • Attempts to collect the balance due on the account. Also buys debt owed by consumers who filed for bankruptcy recently.

  • Many people believe Portfolio Recovery associate is a scam. Well, it is a real debt collection agency.

  • PRA is the nation’s second-largest debt buyer and collector.


Reputation and Practices


  • Aggressive debt collection company.

  • Buy directly from original creditors, so their accounts tend to be fresher than others in the industry.

  • The creditor benefits by receiving a very small percentage on the dollar for each delinquent account, while Portfolio Recovery Associates makes their profit by buying the account for less and collecting the full amount owed from the owner of the account.

  • This is why they put intense and aggressive efforts into the collection of money.


Complaints


  • Despite laws meant to protect the consumer, such as the Fair Debt Collection Practices Act, Portfolio Recovery Associates are still involved in aggressive actions and make use of illegal tactics to harass consumers.

  • Many lawsuits and complaints are registered in the BBB and the Consumer Finance Protection Bureau (CFPB).

  • According to CFPB, someone complained about their communication tactics, "Calling multiple times a day, every single day, for the entirety of the day from dozens of numbers after I have repeatedly told them to stop. I cannot even use my phone for legitimate purposes."

  • Other complaints include collecting a debt that the consumer didn’t owe, harassment and impersonating an attorney, law enforcement, or government official


Pattern of behavior


Their harassing behavior is not new.


  • In 2011, according to the Public Access to Court Electronic Records (PACER), PRA was sued hundreds times for harassing consumers under the FDCPA.

  • “According to the CFPB, more than 11,000 complaints were filed between July 2013 and January 2014 against various debt collection companies, including Portfolio Recovery Associates. PRA ranked third for having the most complaints”(Weston Legal).

  • On September 9, 2015, Consumer Financial Protection Bureau (CFPB) took action against Portfolio Recovery Associates.

  • PRA was found guilty of buying debts without verifying the purchase as it lacked documentation, was inaccurate, or unenforceable.

  • They collected payments from consumers using false statements, and unverified court documents.

  • According to CFPB Richard Cordray, “Portfolio Recovery Associates threatened and deceived consumers to collect on debts they should have known were inaccurate or had other problem.”

  • Now, the two biggest debt buyers in the market must refund millions and overhaul their practices. We will continue to take action to protect consumers from illegal and obnoxious debt collection practices.


Cliff’s Thoughts


I guess they got a taste of their own medicine.


Ironically, those that think or call PRA a scam might not be entirely wrong after all. I believe that Portfolio Recovery Associates with all their experience should have been aware or were aware that those debts were inaccurate, as well as the Robo-signed documents used.


Their behavior is deceitful as they filed lawsuits they did not plan to legitimately pursue because they knew the account owners could not defend themselves.


Fleshing out PRA’s wrongdoing


PRA purchased large debts from original creditors, but some debts left out important information like:


  • The correct or exact balances and interest rates

  • Certain important documents were unavailable

  • Irrespective of this, the company proceeded to buy them, knowing some of the debts were not the most “fresh”, and also demanded the wrong amount, added interest rates, and wrong payment due dates on the account.

  • No investigation, nothing!

  • As if this was not enough dubious scheme for a company, they also engaged in illegal litigation practices


Illegal litigation practices


  • Sued and harassed consumers in state courts across the country knowing their claims could not be proved.

  • The purpose of the lawsuit was to frighten or intimidate consumers as most of the consumers did not fight back or defend these claims, allowing them to win automatically.

  • According to CFBP:

    • They used affidavits that misrepresented that the affiants had reviewed original account-level documentation confirming the consumers’ debts when they had not.

    • They also submitted affidavits with documents attached that they claimed were the consumers’ specific account contracts or records when they weren’t.

    • These shortcuts allowed the companies to churn through lawsuits without doing the research and due diligence required to obtain a legitimate judgment.


This gets interesting!


  • They sent out many letters that contained inaccurate statements and threatened to sue consumers by filing cases that were past the applicable statute of limitations.

  • Also did this to get additional payments.

  • The company wanted to take all the money as they penalized consumers who did not give their consent to receive auto-dialed phone calls.


CFPB Swoops in


  • The CFPB took enforcement action and banned the company for violation of the federal consumer financial laws and prohibited the company from reselling debts to other debt collectors.

  • The company was asked to pay $19 million in consumer refunds and an $8 million penalty.

  • The company was prohibited from:

    • collecting on over $3 million worth of debts

    • Were required to stop collecting unsubstantiated debt and filing lawsuits that are unenforceable and incorrect.

    • Were prohibited to use affidavits to collect debts unless the statements contained within the affidavits specifically and accurately describe the signer’s own personal knowledge of the facts and the documents referenced in the affidavit are attached.

  • Last but not least PRA was told to provide consumers with credible information and original documents to file a lawsuit or collect a debt (what they should have been doing)


When it rains it pours, in this case, good ole’ karma came around.


Class Action


  • On May 12, 2020, a class action lawsuit was filed claiming PRA violated the WARN Act (Worker Adjustment and Retraining Notification Act).

  • On March 23, 2020, approximately 200 former employees of a regional PRA office in Las Vegas were laid off through an email without being given any notice.

    • According to the WARN Act, companies are required to give employees 60 days notice in advance of any mass layoffs.

    • In PRA’s defense, they claimed to have fired or laid off former employees without notice due to the Covid-19 pandemic. Therefore, it is not a violation of the WARN Act.

  • The former employees countered this by claiming the Las Vegas office was not in a good shape and was struggling in many ways.

  • Plaintiffs insist that steps were clearly taken by the company that proves PRA was well aware that its Las Vegas office was in bad shape and headed for closure.

  • For example, as recently as February 2020, just one month before the mass-hi ring, agents of PRA told Las Vegas office employees hoping to receive raises for their hard work that they would be lucky to have a job at all in the coming months, let alone a raise. Around the same time, the workspace being used for the Las Vegas office was allegedly put on the market to be sublet.


Who would’ve thought a company that buys debts for pennies on the dollar would look for shy methods to impose power not only on vulnerable consumers but also on their employees as well?


After all, they seem to enjoy exploiting others for their benefit.


And that’s a wrap on today’s episode!


I hope you had a good time listening and maybe learned something. I am always on the lookout for press releases or other reputable news sources about the misdeeds of this company or any financial company that is harming consumers. So, feel free to send those to me. Please leave a review about this episode if you are so inclined to do so.


You can:

  • Find me on the web at www.theconsumercorner.com and www.cliffcarlsonlaw.com.

  • Find me on twitter….sometimes at @cliff_carlson.

  • Find us on Facebook at @theconsumercorner or myself at @cliffcarlsonlaw

  • And find me on Insta occasion at cliff.carlson.law.

  • Remember to like and subscribe to the podcast, so you do not miss out on future episodes.

  • Also, please share this episode with others if you find it useful.


Have a wonderful week!


REFERENCES- WEBSITES




John Skiba, Esq. | Sep 9, 2015 Midland Funding and Portfolio Recovery Associates

Slammed by Consumer Financial Protection Bureau by | Collection Law Suits, Debt


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