CA DFPI files first enforcement action against a debt collection and debt buyer for violating the state consumer finance protection law | Ballard Spahr LLP


Last week, California’s Department of Financial Protection and Innovation (DFPI) filed its first lawsuit against a debt collection and debt buyer for violating the state’s Consumer Financial Protection Law (CCFPL). The DFPIs Omission and omission of orders and orders for the assessment of penalties ($ 375,000 total) accused F&F Management Inc. (F&F) of violating the CCFPL by (1) engaging in unfair acts and practices and (2) and violating the CA Rosenthal Fair Inkasso Practices Act (Rosenthal), the CA Consumer Credit Reporting Agencies Act (CCRAA) and the Federal Fair Inkasso Practices Act (FDCPA). The CCFPL prohibits a data subject from engaging in any illegal, unfair, fraudulent, or abusive act or practice in relation to consumer financial services or products, or from offering or providing a consumer financial product or service that is inconsistent with consumer financial products by law.

DFPI accuses F&F of violating Rosenthal by leaving consumers automated messages in which it made misrepresentations and threats to take action prohibited under Rosenthal Act, including giving a Has initiated legal proceedings if it failed to do so and would contact the consumer’s employer.

It also accuses F&F of unfair acts and practices in violation of the CCFPL and of violating the CCRAA by “debt parking”. This practice, also known as “passive collection”, involves adding alleged debts to consumer credit reports without first attempting to communicate with consumers about the debt. (In December 2020, the FTC announced an agreement his first debt parking enforcement move. Additionally, the CFPB’s final collection rules, which will come into effect on November 30, 2021, prohibit reporting debts to consumer registration offices until an attempted collection has attempted to contact the consumer.)

F&F is also accused of violating Rosenthal and the FDCPA by failing to provide validation notices and by falsely stating that additional amounts would be added to consumers’ debts if left unpaid. (F & F’s FDCPA violations are charged both directly and indirectly as Rosenthal violations. Rosenthal requires “debt collection agencies,” a term that also includes first-party debt collection, to comply with the FDCPA.)


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