After running an illegal debt-collection scheme that impacted consumers across the country, a group of companies based in Buffalo, New York were banned from the industry today, according to a settlement with the Consumer Financial Protection Bureau and the New York Attorney General.
The settlement followed a 2016 complaint alleging that since at least 2009, Douglas MacKinnon, Mark Gray and the collection firms they ran employed illegal tactics that included improperly tacking $200 onto the debt they alleged each consumer owed and encouraging collections agents to pose as law enforcement officials.
MacKinnon and Gray “profited handsomely from this scheme, which has raked in tens of millions of dollars from millions of consumers nationwide,” the complaint said.
Under the terms of the settlement, MacKinnon and two companies he ran, Northern Resolution Group LLC and Enhanced Acquisitions LLC, will pay $40 million in redress to consumers and a $10 million civil penalty to both CFPB and New York. The settlement calls for Gray and Delray Capital, a company created and run by MacKinnon and Gray, to pay $4 million in redress to consumers and civil penalties of $1 million each to CFPB and the New York Attorney General. The amounts owed by Gray and Delray will be suspended if they pay the penalty to CFPB and just $10,000 in consumer redress.
According to the complaint, the three companies bought tens of millions of dollars in defaulted consumer debt, including debt connected to payday loans, for pennies on the dollar.
After purchase, the companies added $200 to every debt, even in cases where doing so was illegal or violated consumer contracts, court records show. The complaint noted: “Indeed, the companies added this sum even though some of the purchase agreements under which they acquired the debt expressly prohibited them from imposing any additional fees or charges.”
The inflated debts then went into collections with the three companies or were sent to a network of at least 60 debt-collection firms for collection. Those firms appeared on paper to be unconnected to MacKinnon, the complaint said, but he controlled them all, even at times selecting their managers and providing money for payroll.
In 2012, MacKinnon and Gray learned that a debt seller who previously sold them payday-loan debt planned to stop selling to companies that didn’t follow the Fair Debt Collection Practices Act. The pair still wanted to buy from the company, so they created Delray, enabling them to buy millions of dollars worth of payday-loan debt from the debt seller.
Enhanced Acquisitions and Delray “engaged in a host of illegal acts,” court records show, including impersonating law enforcement officials, government agencies and court officials, aided by the use of technology that made it look like collectors had called from government agencies. They also threatened consumers with arrest and legal action, although the companies never filed debt collection lawsuits.
In one instance, an Enhanced collection agent called a consumer and claimed to be an official with the Los Angeles County Court. The collector told the consumer she’d be arrested for check fraud the next day if she didn’t pay the debt.
A Delray script for collection agents read: “You need to be aware of multiple fraud charges being filed against you in ___ County. It is imperative I speak with you to debrief you on your case and retain a statement in your defense. Failure to respond will result in you forfeiting your right to settle this case on a voluntary basis and it will be forwarded out for prosecution.”
Contact Mollie Bryant at 405-990-0988 or bryant@bigiftrue.org. Follow her on Facebook and Twitter.
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They have been taking 210.00 out of my account for 4 months. Threatening to serve me papers if I didn’t pay. I’m fixing to stop payment on them. It is Northern Resolutions.