The Consumer Financial Protection Bureau (CFPB), an agency of the United States government responsible for consumer protection in the financial sector, and the New York attorney general filed a lawsuit in November 2016 against 2 New York debt collectors. The debt collectors were accused of deceiving and harassing millions of consumers to pay inflated debts.
The companies inflated consumer debts and misrepresented the amounts owned by consumers. They falsely threatened legal action and impersonated law-enforcement officials, government agencies, and court officials. The collection agencies send fake emails as if they were government agencies or court officials and harassed consumers and relatives with phone calls.
The lawsuit was filed against Douglas MacKinnon, a managing member of Enhanced Acquisitions, and Mark Gray, owner of Delray Capital. In 2014, the company owned by MacKinnin was renamed Enhanced. As it was stated in the lawsuit, they had created a large illegal debt collection scheme for the purpose of enriching themselves.
According to the lawsuit, filed in U.S. District Court for the Western District of New York, Gray and MacKinnon had created 60 debt collection firms aiming to purchase defaulted debts and carry out an illegal debt collection. The CFPB decided to close the operations of these collection agencies.
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The suit stated that since 2009, the debt collection agencies had regularly been adding $200 to each debt acquired, no matter it was permitted or not by the underlying contract or state law. Consumers were often threatened with legal action by the collection firms, but no case was referred for prosecution. Once an employee at Enhanced told a consumer she didn’t have time to hire a lawyer as she would be arrested the following day.
The Bureau requested the court to impose penalties for the companies’ conduct and require compensation to be paid to consumers harmed.