National Credit Adjusters and CEO Settle $3 Million with CFPB

The Consumer Financial Protection Bureau published a press release on Friday stating National Credit Adjusters (NCA) and it’s former CEO and part owner, Bradley Hochstein, have settled for $3 Million each. The civil money penalties will be suspended if they render $500,000 by the company and $300,000 by Hoschstein. In the consent order the CFPB found NCA in violation of the Fair Debt Collection Practices and Hochstein in violation of the Consumer Financial Protection Act since 2011 for unlawful debt collection practices.

Using a network of different companies to collect debt on behalf of National Credit Adjusters, the entities demanded consumers more of their debts than legally required to, and threatened them with lawsuits and arrests which they did not have the authority to do. The consent order reads,

“NCA and Hochstein continued placing debt with the Agencies for collection with knowledge or reckless disregard of the Agencies’ illegal and harmful consumer debt collection practices. From 2011 through late November 2015, NCA, under Hochstein’s direction, sold consumer debt portfolios with a face value of more than $700 million to Delray Capital LLC and its affiliated companies, including Northern Resolution Group and Enhanced Acquisitions (collectively “Delray”), with knowledge or reckless disregard of Delray’s illegal and harmful consumer debt collection practices. Respondents’ illegal debt-collection acts and practices violate the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531(a), 5536(a)(1), and NCA’s illegal debt-collection acts and practices also violate the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692e, §1692f.”

Hochstein was part of the affairs of the companies as a “related person” as he was directly responsible for National Credit Adjusters and its collection activities from 2011 to 2016. During that time, about 80,000 consumers submitted payments to them and National Credit Adjusters collected $40 million through these company entities. Until November 2015, Hochstein sold “tens of millions of dollars” of consumer’s debt through NCA, cashing out approximately $20 million from the sales to Delray Capital.

Furthermore, National Credit Adjusters had complete authority to acquire and review every aspect of the companies’ collection practices. Their Collection Service Agreements (CSA’s) with them madated they follow applicable state and federal collection laws. NCA’s compliance teams reviewed their governance and policies, assessing the companies’ licence, and evaluating their compliance. The compliance team recommended to National Credit Adjusters to terminate the companies as their collection practices were illegal. National Credit Adjusters continue to place collection orders with them and they acted with authority to represent NCA. Hochstein further obstructed NCA’s compliance personable from performing appropriate reviews of the companies,

“Hochstein determined which Agencies NCA would place debt with, which Agency relationships NCA would terminate, which accounts the Agencies would collect on, and the terms under which the Agencies would collect. “

Because the defendants were aware and failed to prevent the misconduct of the companies, and continued to place collections with them, even after learning their lack of compliance, the CFPB has found the defendants in violations of the Consumer Financial Protection Act . The charges in include collecting more than consumers were required to pay, false threats to take legal action, deceptive and unfair collection practices, and providing substantial assistance to the companies under the Consumer Financial Protection Act and Fair Debt Collection Practices.

The original consent order dated July 12, 2018 and signed by Acting Director Mich Mulvaney may be found at the CFPB wesite here.

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