Two debt buyers, National Credit Adjusters LLC and Webcollex LLC, have entered into consent judgments with the New York Department of Financial Services for allegedly violating the Fair Debt Collection Practices Act and New York Debt Collection Procedures Law.
The settlements, resulting in restitution of $3 million to consumers in the state, mark the first time the New York DFS has prosecuted a collection agency or debt buyer for collecting on payday loans that are illegal under New York law.
National Credit Adjusters and Webcollex, doing business as CKS Financial, allegedly improperly purchased and collected on payday loans from New York consumers. As part of the settlement, National Credit Adjusters will discharge more than $2.26 million in payday loan debts and provide refunds totaling $724,577 to more than 3,000 New Yorkers.
CKS will issue $66,129 in refunds to the 52 New York consumers affected by its practices, as well as discharge $52,941 in debt to 106 New Yorkers. CKS allegedly had attempted to collect on 537 payday and "usurious loan" debts. The consent order required CKS to immediately release and discharge - if the accounts are owned by CKS - or cease collection efforts - if they are owned by a third party - as to all active payday loan accounts.
The investigation revealed that National Credit Adjusters attempted to collect on 7,325 payday loan debts of consumers and collected payments on 4,792 of those debts between 2007 and 2014. The company allegedly repeatedly called consumers at home and at work, threatened to call consumers’ employers and called consumers’ family members to pressure them to pay their alleged payday loan debts.
As part of the settlement, NCA will:
- Discharge all debt connected with the New York payday loan accounts it currently holds;
- Contact credit reporting bureaus and request that any negative information NCA provided relating to New Yorkers’ payday loan accounts be removed;
- Move to vacate any judgments NCA obtained on New Yorkers’ payday loan accounts; and
- Release any pending garnishments, levies, liens, restraining notices, or attachments relating to any judgments on New Yorkers’ payday loan accounts.
"Payday lending is illegal in New York, and debt collectors, like National Credit Adjusters and CKS, who collect or attempt to collect outstanding payments from New Yorkers in violation of New York State and federal Fair Debt Collection Practices laws will be held accountable," said Maria T. Vullo, acting Superintendent of DFS. "DFS will take swift and appropriate action to protect New Yorkers and send a clear message that New York State will not tolerate those who attempt to profit from illegal payday loan activity.” The settlement covers all consumers in New York who had payday loan accounts that National Credit Adjusters collected from 2007 to 2014, except consumers residing in New York City who already received relief under a 2014 settlement with the New York City Department of Consumer Affairs.