On January 30, 2023, the California Department of Financial Protection and Innovation (DFPI) announced it issued enforcement actions and levied fines against five separate entities. Though the DFPI referred to each of these entities as "debt collectors," it is unclear whether these businesses are actual debt collectors or fraudsters posing as debt collectors.
The entities fined by the DFPI for violations of California's Debt Collection Licensing Act and the California Consumer Financial Protection Law (CCFPL) include:
- Amherst and Associates. The Order Assessing Penalties attached to the press release states, "Amherst and Associates was a business entity of unknown type with an unknown principal place of business and several different telephone numbers, including 1877-792-1946."
- Clayton Banner and Associates. The Order Assessing Penalties attached to the press release states, "Clayton Banner and Associates (CBA) is a business entity of unknown form with a telephone number of (941) 444-8855 and an unknown principal place of business."
- SARS Solutions. The Order Assessing Penalties attached to the press release states, "SARS Solutions (SARS) is a business entity of unknown form with a telephone number of (866) 575-2402 and an unknown principal place of business."
- Marvin, McCall and Associates. The Order Assessing Penalties attached to the press release states, "business entity of unknown form, with a purported mailing address at 3281 E. Guasti Road, Suite 700, Ontario, California 91761 and an email address at email@example.com." Proton mail is not a business email address. It is an email service that allows its users to be completely anonymous. The 7th floor of the listed street address appears via Google Maps as a Regus office space.
- Franklin, Moss & Associates. The Order Assessing Penalties attached to the press release states," Franklin, Moss & Associates (Franklin Moss) was a corporation formed in Delaware, with a purported mailing address at 3524 Silverside Roade [sic] Suite 35B, Wilmington, DE 19810-4929." However, that address appears to be a mail collection service for a registered agent, not a place of conducting business. The Order includes a website address, but the site is no longer active.
The DFPI announcement says the above entities engaged in a variety of unlawful and deceptive practices, including:
- Engaging in debt collection in California without a license from the DFPI
- Attempting to collect a debt that a consumer did not owe
- Making unlawful threats to sue on debts
- Making false claims of pending lawsuits
- Failing to notify consumers of their right to request validation of debts
- Making false claims about the authority to collect a debt
- Unlawfully threatening to seize property
- Failing to provide a “validation notice” as required by federal law
The DFPI's press release is indicative of a significant problem plaguing the ARM industry: regulatory bodies, the media, consumer advocates, and others legitimize criminals who choose to call themselves "debt collectors" by calling them "debt collectors” instead of “scammers,” “fraudsters,” or just plain “criminals.”
Taking a step back, how can we assume that the five entities fined by the DFPI are not really debt collectors? Easy. In addition to other factors, none have a valid business address. In its Orders, the DFPI states three of five have an "unknown principal place of business address." One of the others, which might sound like a law firm, comes back to a mail collection business and has a now-deleted website. The last one - with the proton.mail email address- appears at best to be tied to another business that may collect mail. No legitimate debt collector is operating without an address or using a proton.mail email address.
Although not explicitly stated in its announcement, it seems the DFPI might also think these entities are scammers. Though the word "scam" is included in the title of its announcement, it's negated by the first sentence, which refers simply to "debt collectors." Toward the end of the press release, the DFPI commissioner generally refers to "fake debt collector scams," but this phrase is not tied directly to the fined entities and is too little too late in the announcement. Neither nullifies the implication that these were bad-acting debt collectors, instead of potential criminals.
Debt Collection plays a critical role in the credit ecosystem, and there are good, legitimate debt collectors out there who help consumers get out of debt and find their financial footing. But it's tough for consumers to understand that every "debt collector" isn't horrible when regulatory bodies and other organizations with a microphone give criminals the same designation as legitimate entities.
Judges don't legitimize those accused of the unlicensed practice of law by calling them "lawyers." We don't refer to people posing as medical professionals as "doctors." So why do we do this with debt collectors? Regulators need to do better, the media needs to do better, and those of us in the ARM industry need to correct them whenever and wherever we can.