The Consumer Financial Protection Bureau (CFPB), working with the New York Attorney General, filed a proposed stipulated judgment in federal court to settle its case against an Upstate New York debt collection enterprise.
The judgment would order all participants in the scheme to exit the debt collection market and shutter their businesses due to their history of deception and harassment. Their debt collection companies would also be required to pay a total of $4 million in penalties.
The complaint alleges that the companies created “smear campaigns” using social media and other methods. They allegedly pressured people to pay by contacting and disclosing the debts to their immediate and distant family members, grandparents, in-laws, ex-spouses, employers, work colleagues, landlords, Facebook friends, and other known associates, according to the CFPB. In addition, the collectors allegedly repeatedly called people multiple times every day over periods lasting a month or longer, using insulting and belittling language and intimidating behavior.
“It is illegal for debt collectors to orchestrate smear campaigns using social media to extort consumers into paying up,” CFPB Director Chopra said. “Our action with the New York Attorney General bans the ringleaders of this operation from the industry to halt further misconduct.”
The defendant companies are JPL Recovery Solutions; Regency One Capital; ROC Asset Solutions, which does business as API Recovery Solutions and Northern Information Services; Check Security Associates, which does business as Warner Location Services, Pinnacle Location Services, and Orchard Payment Processing Systems; Keystone Recovery Group; and Blue Street Asset Partners. The individual defendants are owners Christopher Di Re, Scott Croce, Susan Croce, Brian Koziel, and Marc Gracie, who acted as managers of some or all of the companies, according to the CFPB.
“This debt collection operation used illegal and deceptive tactics to prey on consumers, and now they are paying the price for the harm they caused,” New York State Attorney General Letitia James said. “Predatory debt collectors make their profit by targeting hardworking consumers and then illegally saddle them deeper into debt. These debt collectors used harassing calls and false threats to coerce consumers to pay, not only is that illegal, it’s also downright shameful. 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.”
The various companies are interrelated collections businesses based out of Getzville, N.Y. These companies purchased defaulted consumer debt for pennies on the dollar from high-interest personal loans, payday loans, credit cards, and other sources. The network then attempted to collect debts from about 293,000 consumers, generating gross revenues of approximately $93 million between 2015 and 2020.
The CFPB and the NY Attorney General allege that the network used deceptive and harassing methods in violation of federal laws. Specifically, the complaint alleges that they falsely threatened people with arrest and imprisonment if they did not make payments and falsely threatened legal action, including wage garnishment and property seizures. In addition, the defendants allegedly lied about debt amounts.