Consumer Portfolio Services Inc. will pay more than $5.5 million to settle Federal Trade Commission charges that the company used illegal tactics to service and collect consumers’ loans.
The FTC alleged that the Irvine, Calif.-based company collected money that consumers did not owe, harassed consumers and third parties, and disclosed debts to friends, family, and employers.
CPS has agreed to refund $3.5 million on 128,000 accounts and to halt collections on another 35,000 accounts to settle the charges. CPS will pay another $2 million in civil penalties for alleged violations of the Fair Debt Collection Practices Act and the Fair Credit Reporting Act.
“At the FTC, we hold loan servicers responsible for knowing their legal obligations and abiding by them,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection, in a release.
She said the law was clear that loan servicers cannot charge consumers more than they owe. And she said they can’t threaten and harass consumers about delinquent debts.
FTC said CPS’s collection violations include disclosing the existence of debts to third parties; calling consumers at work when not permitted or inconvenient; calling third parties repeatedly with intent to harass; making unauthorized debits from consumer bank accounts; falsely threatening car repossession; and deceptively manipulating Caller ID.