Debt Collection Company to Pay $44.1 Million in Relief for Using Deceptive, Illegal Tactics
Two companies that used illegal debt collection tactics have been ordered to pay $44.1 million in cash relief and balance reductions, and pay a civil penalty of $4.25 million.
The Consumer Financial Protection Bureau (CFPB) found that Westlake Services and Wilshire Consumer Credit deceived consumers by calling under false pretenses, using phony caller ID information, falsely threatened to refer borrowers for investigation or criminal prosecution, and illegally disclosed information about debts to borrowers' employers, friends, and family.
Westlake Services, LLC is an indirect auto finance company based in Los Angeles that specializes in purchasing and servicing auto loans, including many subprime and near-subprime loans. Westlake purchases loans from auto dealers nationwide. Wilshire Consumer Credit, LLC, a wholly owned subsidiary of Westlake, offers auto title loans directly to consumers, largely via the Internet, and services those loans. Wilshire also purchases and services auto title loans made by others.
A CFPB investigation found that the company violated a number of federal laws as they tried to collect debts owed on these loans.
Using a computer program called Skip Tracy, the company altered its caller ID information to make it appear the calls were coming from repossession companies, official investigators, family members, and small businesses like flower shops in order to get the borrower on the phone.
Between January 2010 to April 2014, Westlake and Wilshire representatives used Skip Tracy to make it appear that they were calling from investigation or enforcement divisions and then explicitly and implicitly threatened to file criminal charges against consumers even when they never intended to do so.
For borrowers whose cars had been repossessed, the companies implied that their vehicles would be released if they made a partial payment on the account. Borrowers who did so later found that their cars would only be released if they paid the debt in full. Repossession companies were hired to make debt collection calls even if the companies had no intention of repossessing the cars.
Westlake and Wilshire also used Skip Tracy to call friends, family members and employers of the borrowers and made statements implying that consumers were delinquent on loans or facing repossession, investigation or criminal charges.
Additionally, the companies deceived borrowers about the effects of due date changes or extensions to loan terms and hid the true cost of credit.
More information about the complaint and the settlement can be found here.