FTC settles first enforcement action targeting “debt parking”

The FTC has announced a settlement of its first enforcement action targeting the practice of “debt parking.”  As described in the FTC’s complaint filed in a Missouri federal district court against Midwest Recovery Systems, LLC and its owners, this practice, also referred to as “passive debt collection,” involves the placing of purported debts on consumers’ credit reports without first attempting to communicate with consumers about the debts.

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The CFPB Curtails the Activities of an Unlicensed Debt Collector: Striking a Chord Between State Licensing Compliance and the FDCPA

On December 8, 2020, the Consumer Financial Protection Bureau (CFPB) entered into a Consent Order with RAB Performance Recoveries, LLC (RAB) for engaging in debt collection activity without a license in the states of Rhode Island, Connecticut and New Jersey. RAB’s failure to obtain any proper state licensing in those specific states led the CFPB to issue a fine of over $200,000 as well as a permanent order restraining RAB and its principals from ever engaging in a very broad description of debt collection activities. Both state regulators and the CFPB are responsible for regulating debt collection activities and both have a vital interest in the work of the other. However, in this instance, the CPFB acted alone and found that RAB’s conducted not only violated the Fair Debt Collection Practices Act (FDCPA), but their conduct amounted to a UDAAP violation under the Consumer Financial Protection Act of 2010 (CFPA).

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