On January 10, 2022, the Consumer Financial Protection Bureau (CFPB) issued a press release announcing the filing of a lawsuit against United Debt Holding (UDH), JTM Capital Management (JTM), and United Holding Group (UHG), along with their respective owners. Craig Manseth, Jacob Adamo, and Darren Turco. CFPB It alleges that UDH, JTM, UHG and their owners knowingly used third-party collectors who engaged in illegal and deceptive practices. Through a statement, UHG and its owners denied the allegations.
According to the CFPB: M.Anseth, Adamu and Turku founded UHG in May 2017. Prior to that, Mansith owned UDH, Turco worked at UDH as manager, and Adamo owned JTM. After forming UHG, she ran the business of UDH and JTM. All three companies are debt buyers and sellers.
Allegations of the Palestinian Civilian Protection Board (CFPB):
The complaint claims that UHG, UDH, JTM and their owners continued to set up collection accounts with sellers despite knowing that sellers were deceiving consumers. The entities and their owners became aware of these violations because their compliance teams received (1) phone call recordings where Collection agents threatened lawsuit and made false statements about credit reports; and (2) hundreds of Complaints that alleged sellers were threatening arrest, imprisonment, or lawsuits if consumers did not pay their debts promptly. Despite knowing that the collection sellers retained by JTM were violating federal law, UDH increased the volume of business he sent to JTM. By 2017, UDH was using JTM almost exclusively for debt deposit despite objections from UDH’s compliance manager. As a result, some outside companies have continued to issue false threats and misleading statements for years.
“This debt collection ring and its operators have created conditions for rampant abuse,” said Rohit Chopra, director of the CFPB. “Companies cannot profit and evade responsibility simply by creating a maze of shape-shifting entities and enabling third parties to take advantage of consumers.”
In response to the lawsuit, UHG issued a statement denying all allegations and noting that neither JTM nor UDH is currently in business. According to the UHG, the CFPB’s complaint is devoid of facts, and the CFPB has not substantiated its claims despite repeated requests. According to UHG, no accounts purchased or placed by UHG were described in the CFPB complaint. Instead, the complaint’s allegations focus on collection activity by another debt buyer, which purchased accounts from UDH in 2015.
“The office’s actions to sue UHG based on consumer complaints that preceded UHG is surprising,” says Craig Manseth, former UDH owner of debt acquisition and investor in UHG. UHG operates a first-class compliance program that addresses all issues when we become aware of them. It tells us that the CFPB did not claim that consumers were harmed.” UHG expects an application to be denied.
The full complaint filed by the CFPB can be found here.
UHG’s full statement in response to the lawsuit can be found here.
The broader issue here, other than whether the CFPB or UHG version of the facts is correct, is that the CFPB will not allow the entities it oversees to blame the seller. It is clear from the complaint that the CFPB expects debt collectors to scrutinize their vendors for compliance and to terminate those who do not meet compliance standards. Furthermore, the CFPB appears to regard the audit findings by the compliance team as evidence that the company has knowledge of vendor issues. This position is consistent with previous CFPB enforcement actions.
It is also worth noting that the CFPB included in its complaint and press release an allegation that UDH continued to place accounts with JTM “despite the objections of the UDH Compliance Director”. This statement is another reminder The Competition and Consumer Protection Board (CFPB) expects ARM entities to listen to the compliance team’s input. While it may not be a source of income, compliance officers do not simply decorate windows or as staff on staff to check a box in various audits.
To ensure that they are protected from such allegations from the CFPB, ARM entities should review their compliance management system to ensure (i) that vendor audits occur regularly; (ii) The results are reported to operations; (iii) Negative consequences are remedied by repair, reduction of business, and/or seller termination; and (4) that this process is taken in a written procedure. Regardless of who prevails in this, he/she said, it is clear that the do nothing approach to audit findings is not sufficient for the CFPB.