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Portfolio Recovery Associates

The Langel Firm defends consumers against New York state court collection lawsuits brought by Portfolio Recovery Associates. In appropriate cases, we may also take action against Portfolio Recovery for violations of the Fair Debt Collection Practices Act and deceptive business practices.

Our team stands ready to shield you from collection lawsuits, wage garnishment, and bank account seizures. We offer flexible payment plans tailored to your needs. Regardless of your struggle, be it credit card debt, medical bills, tuition expenses, or other forms of consumer debt, our expertise is at your service. Our primary area of focus is judgment-enforcement defense, where we protect you against wage garnishments, bank seizures, and legal proceedings (such as summons and complaints).

Contact us to help you with your matter.

CFPB Imposes Severe Penalties on Encore Capital Group and Portfolio Recovery Associates for Consumer Law Violations

In a robust display of consumer protection, the Consumer Financial Protection Bureau (CFPB) has imposed severe penalties on Encore Capital Group, parent of Midland Funding LLC and Midland Credit Management, and Portfolio Recovery Associates. These entities are among the biggest debt buyers who sue on consumer debt. The CFPB discovered that both Midland and Portfolio were guilty of various consumer-law violations, including collecting debts based on incorrect information, neglecting dispute investigations, and suggesting legal involvement in their practices.

As a result, Encore Capital Group (Midland) has been ordered to issue $42 million in refunds, halt collections on over $125 million in debts, and contribute $10 million to the CFPB's Civil Penalty Fund. Similarly, Portfolio Recovery Associates must dispense $19 million in refunds, stop collections on over $2 million in debts, and donate $10 million to the Civil Penalty Fund.

The CFPB's actions underscore its commitment to prevent debt buyers from taking shortcuts and causing harm to the public. If you've had any contact with Midland Funding LLC or Portfolio Recovery Associates, reach out to us immediately.

The Consumer Financial Protection Bureau recently levied millions of dollars in penalties against Portfolio Recovery for collection defects. See that blog post here.

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Consumer Laws Violated in Debt Collection Case: Hempel-Dubois v. Portfolio Recovery Associates, LLC

In Hempel-Dubois v. Portfolio Recovery Associates, LLC, Kristina Hempel-Dubois alleged that Portfolio Recovery Associates (PRA) violated various federal and state laws in their debt collection attempts. Despite Hempel-Dubois disputing the debt, PRA continuously sought to collect on the alleged debts, including filing a lawsuit with deceptive information, using counterfeit documents, and causing emotional distress through improper service of process.

In 2011, Portfolio Recovery Associates faced allegations in a class-action lawsuit for filing numerous affidavits signed by their employee, Martha Kunkle, who had unfortunately passed away fifteen years prior. Despite the ensuing controversy from the class action, Portfolio proceeded to use affidavits again bearing the deceased Ms. Kunkle's signature in a subsequent case. After the court dismissed this case due to the fraudulent affidavit, the targeted consumer took legal action against Portfolio, claiming abuse of process.

3 Key Points:

  1. Hempel-Dubois contested the debt claimed by PRA, who then pursued abusive and misleading collection practices, including the initiation of a lawsuit without credible evidence of the debt.
  2. PRA's submission of fraudulent and misleading documents to the court constituted grave violations of both federal and state laws.
  3. Hempel-Dubois suffered considerable emotional distress due to PRA's aggressive and illegal collection methods, including the improper service of process during a social gathering at her home.

Case citation: Hempel-Dubois v. Portfolio Recovery Associates, LLC, Civil No. 11–cv–09–JD (Aug. 17, 2011).

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Application of New York's Borrowing Statute and Delaware's Statute of Limitations in Portfolio Recovery Associates, LLC v. Jared King

In the case of Portfolio Recovery Associates, LLC v. Jared King, the New York Court of Appeals determined that a choice of law provision within a credit card agreement did not enforce the use of Delaware's statute of limitations for a breach of contract lawsuit. Despite this, the court applied New York's borrowing statute, necessitating the adoption of Delaware's statute of limitations and tolling rules, which culminated in a verdict that Portfolio Recovery Associates' claims were time-barred due to the lapse of Delaware's three-year limitations period.

3 Key Points:

  1. The choice of law clause in the credit card contract did not mandate the utilization of Delaware's statute of limitations.
  2. The application of New York's borrowing statute necessitated the usage of Delaware's statute of limitations and tolling rules in the lawsuit.
  3. Due to Delaware's tolling statute not extending the limitations period, Portfolio Recovery Associates' claims were deemed time-barred.

Case Citation: Portfolio Recovery Associates, LLC v. King, 14 NY3d 410, 901 NYS2d 575 [2010].

The Portfolio v. King case creates great law for debt defense lawyers and NY consumers

Portfolio v. King was a key 2012 statute-of-limitations case in which New York's highest court held that, in debt buyer cases, the statute of limitations of the state where the original creditor was based applies in collections cases if that statute is shorter than New York's. See our oldie-but-goodie blog from 2012 to get the breaking legal news as it unfolded: Portfolio Recovery Associates and Making Statutes of Limitations Work for You.

What is New York's "Borrowing Statute" is it relates to the "Statute of Limitations"?

Short Answer: The New York Borrowing Statute (CPLR 202) is a rule that sets a time limit for starting a lawsuit that's based on something that happened outside of New York. It says that the time limit to start the lawsuit should follow either New York's rules or the rules of the place where the incident happened - whichever is shorter. So, if something happened in another state and you want to sue in New York, you have to start the lawsuit within the time limit set by either New York or that other state, using the shortest time limit. This was used in a case involving a company called Portfolio Recovery Associates, where they had to follow the time limit rules of Delaware because that's where the original issue happened.

Long Answer: The New York Borrowing Statute (CPLR 202) is a provision of New York's Civil Practice Law and Rules that governs the time limitation for initiating a legal action that accrued outside of New York state. According to this statute, an action based on a cause of action that accrued outside of the state cannot be initiated after the time period limited by the laws of either New York state or the place outside the state where the cause of action originated. However, there is an exception when the cause of action accrues in favor of a resident of New York state - in this case, the time limited by the laws of New York state applies.

The borrowing statute effectively requires that when a non-resident party files a lawsuit based on a cause of action that originated outside of New York, the lawsuit must be initiated within the timeframe specified by both the laws of New York and the laws of the jurisdiction where the cause of action originally arose. In instances where the statute of limitations of the other jurisdiction is shorter, it will be applied.

The New York Court of Appeals clarified the application of this rule in the case of Portfolio Recovery Associates, LLC v. Jared King. In this case, the court applied Delaware's statute of limitations instead of New York's because the cause of action (a breach of contract) was deemed to have occurred in Delaware, where the original creditor (Discover Bank) was incorporated and suffered economic harm due to the alleged breach of contract. Hence, due to New York's borrowing statute, the shorter Delaware statute of limitations was applied.

Portfolio Recovery Associates Faces Legal Actions for Alleged Misconduct by Consumer Financial Protection Bureau (May 2023)

In a May 2023 article titled, Portfolio Recovery Associates under fire for misconduct, the following five points were taken from the article:

  1. The Consumer Financial Protection Bureau (CFPB) has taken action against debt collection company Portfolio Recovery Associates, proposing a court order based on purported illegal practices.
  2. The CFPB alleges that Portfolio Recovery Associates violated a previous order from 2015, where it was fined $27 million for deceptive tactics, and continued to engage in such practices contrary to the Fair Debt Collection Practices Act and the Consumer Financial Protection Act.
  3. Accusations include unsubstantiated claims of disputed debts, initiating legal action without providing proper documentation, misrepresenting proof of documentation timelines, and pursuing debt outside the statute of limitations.
  4. The company is also accused of conducting unlawful investigations, failing to provide correct information to consumers disputing their collections notices, and not resolving disputes within the required timeframe.
  5. If the court approves the order, Portfolio Recovery Associates will be responsible for refunding over $12 million to affected consumers, pay a $12 million fine into the victims’ relief fund, and will be prohibited from collecting debts without the necessary documentation that confirms the consumers' responsibility.

Additional coverage by the Consumer Financial Protection Bureau are made in the following five-point summary:

  1. The CFPB Director Rohit Chopra commented that Portfolio Recovery Associates continued to violate the law through intimidation, deception, and illegal debt collection tactics and lawsuits, despite being caught in 2015.
  2. Portfolio Recovery Associates is a wholly-owned subsidiary of PRA Group (NASDAQ: PRAA) and reported a net income of over $183 million in 2021. Its principal headquarters is located in Norfolk, Virginia.
  3. The CFPB alleges that Portfolio Recovery Associates failed to inform consumers about the outcomes of investigations, failed to timely resolve disputes, and conducted insufficient investigations in cases where consumers alleged fraud or identity theft.
  4. The CFPB claims the authority to take action against Portfolio Recovery Associates for alleged violations of the Consumer Financial Protection Act's prohibition on deceptive conduct, the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, and Regulation V.
  5. The proposed court order stipulates that Portfolio Recovery Associates should pay at least $12.18 million to consumers affected by its illegal collection practices, improve responses to consumer disputes, rectify failures related to consumer reporting, and pay a $12 million penalty to the CFPB's victims relief fund.

BIOGRAPHICAL INFORMATION ABOUT PORTFOLIO RECOVERY ASSOCIATES

Portfolio Recovery Associates is headquartered at 120 Corporate Blvd, Norfolk, VA 23502. (800) 772-1413.

Portfolio Recovery Associates (PRA) in 2011 was the sixth largest debt buyer in the United States, based on net income in 2010 of $372.7 million, according to Collections and Credit Risk. In New York, Portfolio Recovery Associates is frequently represented by: Forster and Garbus, LLP and Malen & Associates, P.C. It is a foreign limited liability company with a principal place of business in Norfolk, Virginia.