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EOS Must Refund Consumers For Illegally Collecting Old AT&T Cellphone Debt

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The Consumer Financial Protection Bureau cracked down on another rogue debt collector. EOS CCA (EOS), a Massachusetts debt collection firm, was in the business of collecting on old cellphone debt that consumers disputed and EOS did not verify. EOS also reported inaccurate information to the credit bureaus and failed to correct reported information that was determined to be inaccurate.

EOS must refund at least $743,000 to consumers, and pay a $1.85 million civil money penalty for their illegal debt collection practices related to the collection of $2.3 billion in consumer cellphone debt purchased from AT&T.

According to the CFPB’s complaint PDF, in 2012, EOS paid AT&T $35.4 million for a portfolio of more than three million cellphone accounts with a total face value of $2.3 billion. EOS is a debt collection company headquartered in Norwell, Mass. EOS collects delinquent or charged-off accounts that were purchased for a fraction of the value of the debt. Although EOS, like most junk-debt buyers, typically pays only pennies on the dollar for the debt, it may attempt to collect the full amount claimed by the original lender.

Although many of the purchased accounts were old debts that had been previously sent to multiple collection agencies, contained inaccurate or fraudulent information, or were previously paid or settled, EOS continued collection efforts.

The CFPB claims the company continued to collect and report on the debts, including debts that consumers disputed, without verifying that those debts remained outstanding.

“After buying a portfolio of debt, EOS soon learned of several red flags that raised doubts about the debt’s validity. Even so, EOS still proceeded to collect certain disputed and unverified debts,” said CFPB Director Richard Cordray. “It is unacceptable that consumers were harmed by these practices and that the company supplied inaccurate information to the credit reporting companies, so today we are taking action to stop it.”

“Contrary to the sales agreement with AT&T, the portfolio contained time-barred debt, fraudulent debt, and debts consumers disputed as having been paid or settled,” the CFPB wrote in a press release.

AT&T is not the subject of the CFPB complaint or consent order, and has not been accused of any wrongdoing.

“Today’s action was specifically regarding the illegal conduct by EOS. Regarding AT&T, the Bureau does not confirm or deny any subjects or matters under investigation,” bureau spokeswoman Moira Vahey said.

EOS also took the inexplicable step of reporting to the credit bureaus that all 3 million accounts were disputed by the account holder shortly after acquiring the portfolio. A month later, EOS reversed the disputed notation only to reinstate it. Then, a few weeks later, EOS deleted most of those dispute histories.

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“EOS does not have sufficient, or in some cases, any documentation from AT&T to refute consumers’ claims that the vast majority of these accounts have been paid or resolved,” the CFPB said.

EOS made false and misleading representations when attempting to collect on the debts, the CFPB said.

“EOS continued to represent that consumers owed the amounts claimed on particular accounts even after learning that AT&T Portfolio contained unreliable data with respect to some accounts, including previously paid or settled accounts,” it said. EOS also kept reporting the consumers to the credit reporting agencies.

Under the terms of the proposed consent order, EOS would be required to refund at least $743,000 to consumers for payments made on debts that were disputed but that EOS did not verify. EOS would be barred from collecting on an AT&T debt that a consumer has disputed and the firm is unable to substantiate. The firm would also barred from reselling debts for five years.

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