Indiana Joins Operation Collection Protection, A Joint Federal-State Sweep Against Debt Collection Abuse

 Attorney General Greg Zoeller announced Indiana’s involvement in a nationwide debt collection abuse sweep, which resulted in 110 actions being filed by federal, state and local agencies against illegal debt collection operations in 2015. The Indiana Attorney General’s Office took action against a number of entities for using deceptive tactics to collect on consumer debt this year.

Indiana and federal law prohibits debt collectors from using abusive, unfair or deceptive practices when collecting on debt, and prohibits debt collectors from suing or threatening to sue consumers based on debt that is beyond the applicable statute of limitations or “stale.” Additionally, debt collectors cannot use fear tactics or threaten criminal action when collecting on debt.

The Indiana Attorney General’s Office received 912 debt collection-related complaints in 2014 and 2015, ranking it among the top complaints received by the AG’s Office. Nationally, consumers filed more than 280,000 complaints with federal authorities in 2014 relating to debt collection, which is more complaints than any other industry.

Led by the Federal Trade Commission (FTC), Operation Collection Protection brought together a national coalition of federal, state and local enforcement and regulatory organizations to address illegal debt collection practices.

“The debt collection industry is governed by federal and state laws that aim to make the process more transparent and fair for consumers,” Zoeller said. “My Office hears from hundreds of consumers each year about debt collectors who use threatening, false and illegal tactics to pursue debt. Many of these third-party debt collection agencies operate nationally, so cooperation among federal, state and local partners is key to stopping this abuse.”

To resolve debt collection abuse allegations in Indiana, the Attorney General’s Office reached settlement agreements with the following entities in 2015:

• Gregory K. Pugh, P.C. doing business as Dominion Asset Recovery – Based in Virginia, this entity allegedly used illegal, threatening tactics in attempt to collect on stale debts from Indiana consumers, including debt the entity purchased from EZ Payday Loans of Indiana. To resolve these allegations, this entity can no longer purchase, assign, transfer, sell or collect debts from any consumers living in Indiana. The entity also agrees to discharge any debts it owns and set account balances to zero for any consumers living in Indiana who obtained a loan from EZ Payday Loans. Additionally, the entity must pay $5,500 to the Indiana Consumer Protection Fund.
• Dynamic Recovery Solutions, LLC –  Based in South Carolina, this third-party debt collection agency allegedly attempted to collect on stale debt without disclosing that it cannot sue on stale debt and that if a consumer makes a partial payment on stale debt, a new limitations period could arise that would allow the company to sue. The Indiana Attorney General’s Office received 12 complaints from consumers since 2011 against this agency for its debt collection practices. To resolve these allegations, Dynamic Recovery Solutions must reform its debt collection tactics to comply with state and federal laws, and make the proper disclosures when collecting on stale debt. Dynamic Recovery Solutions must also pay $1,000 to the Indiana Consumer Protection Fund.
• Chase Bank USA N.A. and Chase Bankcard Services Inc. – As part of a national $136 billion settlement led by the U.S. Consumer Financial Protection Bureau, Chase was accused of pursuing credit card debt collection cases based on bad information, including cases where the listed debt was the wrong amount, tied to the wrong person, discharged or not eligible to pursue. To resolve these allegations, Chase agreed to cease all collection efforts on more than 528,000 consumers, including an estimated 7,000 Indiana consumers. The agreement also required Chase to significantly reform its credit card debt collection practices in areas of declarations, collections litigation, debt sales and debt buying.

More than 75 organizations participated in Operation Collection Protection, including the FTC, U.S. Consumer Financial Protection Bureau, Department of Justice, 48 state attorneys general and the District of Columbia, 17 state regulatory agencies, one Canadian provincial regulatory agency, and a number of local authorities.

The agencies who participated in this sweep will continue to work together to eliminate abusive and unlawful debt collection practices. This will include continued sharing of information and best practices, more joint actions, and more coordination of policy and enforcement efforts.

Zoeller thanked Deputy Attorneys General Tom Irons and Martha Showers for their work on these cases.

For consumer tips on debt collection, click here. For a list of all actions involved in Operation Collection Protection, click here. To view the FTC’s press release on Operation Collection Protection, click here.