BHere in Irvine, consumers with debts have substantial rights, particularly with respect to debt collection companies. For one, debt collectors are not allowed to harass debtors and cannot use misleading and/or deceptive practices to try and collect debts. As an example of a deceptive debt collection practice, a debt collector cannot send a notice that falsely implies that a lawsuit has been filed to collect the debt.
This is the deceptive practice used by a debt collection company called Yorba Capital Management LLC (“Yorba”). From at least 2017 to mid-2020, Yorba sent letters through the mail to thousands of debtors entitled “LITIGATION NOTICE.” The letters contained fake case numbers and captions, giving the false impression that a lawsuit had already been filed. Debtors were told to contact Yorba within 10 days to “avoid any further legal action” and the letters threatened that, after a judgment was entered, collection of the judgment could be done through wage garnishments, bank account levies, property liens, and drivers’ license suspensions.
Despite what Yorba claimed in its “Litigation Notices,” Yorba had NOT filed any lawsuits, never filed lawsuits, never obtained any court judgments and, indeed, did not retain any law firms or lawyers. Likewise, Yorba never used garnishments, levies or liens and never attempted to have a debtor’s driver’s license suspended.
Sending letters with all of these falsehoods caused Yorba — and its sole owner — to be legally banned as a debt collection company. One of the federal agencies that protects debtors is called the Consumer Financial Protection Bureau (“CFPB”). Along with other federal agencies — like the Department of Justice — the CFPB has responsibility for enforcing the Consumer Financial Protection Act and the Fair Debt Collection Practices Act.
In 2020, the CFPB began an investigation of Yorba’s use of its “Litigation Notice” and other practices. The CFPB concluded that, based on the “Litigation Notices,” consumers could reasonably believe that (i) litigation had already been filed and that (ii) all the actions threatened by Yorba — such as garnishments — could happen if the debtors failed to pay. However, the investigation also determined that, despite the claims and threats made in the “Litigation Notice,” Yorba never intended to sue debtors and never intended to take ANY legal action against debtors. Taken together, the CFPB concluded that Yorba had engaged in false and misleading collection practices in violation of federal law.
As a result, the CFPB demanded that Yorba — and its owner — disgorge profits and pay a civil penalty amounting to $860,000 and be permanently banned from the debt collection industry. A consent decree to that effect was entered into on April 6, 2021. The actions taken against Yorba are consistent with other actions taken by the CFPB. For example, in 2018, the CFPB punished a New York-based debt collector which threatened consumers (and their family members) with lawsuits, visits from process servers and arrest, without authority or intent to take those actions.
Legal lesson — if you receive a letter from a debt collector claiming that a lawsuit has been filed and threatening other legal actions, do not take the letter at face value. Seek the advice and counsel of dedicated and trusted Debtor’s Rights attorneys like the ones at Guardian Litigation Group.
Contact an Experienced Debt Relief and Debtor Rights Attorney
For more information, contact the Debtor’s Rights attorneys at Guardian Litigation Group. If you think you have been subject to unfair and deceptive debt collection practices, we can help. We can also help with other debt-relief legal services like bankruptcies and debt settlements. We have the tools and experience you need. Our Mission is to provide unparalleled legal services and support to financially distressed individuals. We can be reached via our contact page or by phone at (949) 569-9006.