In early November, the Consumer Financial Protection Bureau and the New
York Attorney General, filed a lawsuit in a federal district court against
a debt collection network based in Buffalo, New York. The complaint alleges
that Douglas MacKinnon and Mark Gray operated a network of sham companies
that harassed, threatened, and deceived millions of consumers. MacKinnon
and Gray used these deceptive techniques when attempting to collect on
debts that were inflated or were not owed by the contacted consumers.
Through this action, the CFPB is seeking that the illegal operation be
shut down, compensation for victims, and a civil penalty be assessed against
the companies and partners involved.
The companies involved in this lawsuit include Northern Resolution Group,
LLC, Enhanced Acquisitions, LLC, and Delray Capital, LLC. According to
the CFPB and New York Attorney General, these three companies are interrelated
collections companies based in Buffalo, New York. Between these companies,
millions of dollars’ worth of consumer debt has been purchased.
These companies were created, operated, and overseen by Douglas MacKinnon
and Mark Gray.
According to the complaint, since 2009, Northern Resolution Group, Enhanced
Acquisitions, and Delray Capital routinely inflated consumer debts and
rely on illegal practices to collect as much money as possible from consumers.
It also alleges that MacKinnon, set up a network of at least 60 additional
“fly-by-night” debt collection firms to collect on large debt
portfolios purchased by the three companies. These companies were used
when other debt sellers would no longer do business with the defendants
and defendant companies in this case.
The complaint alleges that the defendants violated the Fair Debt Collection
Practices Act, as well as, the Dodd-Frank Wall Street Reform and Consumer
Protection Act. The actions have also been alleged to be in violation
of New York law and New York State Debt-Collection Law. Allegedly, MacKinnon,
Gray, and their network of debt collection companies inflated consumer
debts and misrepresented amounts consumers owed. The companies added $200
to each consumer debt account they acquired, even where state law or the
underlying contract prohibited such fees or charges from occurring. In
some cases, debts were inflated through additional unauthorized fees and
charges. In some cases, collectors quoted consumer balances that exceeded
600% of the original debt amount.
The companies also falsely threatened legal action against consumers, when
in reality the collectors had no intention of pursuing such action. Threats
of legal action included accusing consumers of committing crimes and claiming
that consumers would be arrested if the debts were not paid. Representatives
from the companies also impersonated law-enforcement officials, government
agencies, and court officers. In many cases, the companies made it appear
as though communication such as phone calls and emails were coming from
government or court officials.
According to the complaint, MacKinnon and Gray knew, directed, and encouraged
the illegal actions alleged. Additionally, they have profited significantly
from these practices—amounting to tens of millions of dollars annually.
Through the lawsuit, the CFPB and New York Attorney General seek to stop
the alleged unlawful practice and have also requested that the court impose
penalties on the company and its partners for their conduct.