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Illegal Debt Collection Scheme Uncovered

The Consumer Financial Protection Bureau (CFPB) has sued two individuals (and their three companies) in New York federal court for their alleged roles in a “massive, illegal debt-collection scheme” which involved improperly increased debts and threats of arrest or legal action against borrowers who weren’t paying.

Law 360 reports that “Douglas MacKinnon and Mark Gray are accused of running the Buffalo-based scheme through a network of interrelated companies that bought defaulted consumer debt portfolios for pennies on the dollar and then collected on them illegally.” MacKinnon had established two of the main companies, Northern Resolution Group LLC and Enhanced Acquisitions LLC, while Gray came on to help form Delray Capital LLC sometime after.

The CFPB reported that the companies purchased tens of millions of dollars of debt, and consistently added $200 to each portfolio they bought. The men would then either collect the inflated debts themselves or send them off to be collected by dozens of other companies controlled by Douglas MacKinnon. Additionally, certain agents of the companies engaged in a host of illegal activities to collect the debts, including impersonating law enforcement, court officials, etc., the CFPB said.

“Our lawsuit asserts that millions of consumers were harassed, threatened and deceived as part of a massive scheme to collect inflated debts,” CFPB Director Richard Cordray said in a statement. “Today we are taking action against the ringleaders of this operation so they can no longer prey upon vulnerable consumers.”

In 2012, MacKinnon and Gray learned that a debt seller from which Northern Resolution bought loan debt from would no longer sell to or place debt with companies that didn’t have collection policies and procedures in place that complied with the Fair Debt Collection Practices Act. Since NRG didn’t have policies like this, the two men created Delray, which had written policies that the agency called little more than “window dressing,” and continued purchasing debt from the same seller seamlessly.

The CFPB later brought to light that this scheme has been ongoing since as early as 2009, when MacKinnon established Northern Resolution Group. The company then rebranded in 2014, switching its name to Enhanced, though its business practices remained unchanged.

Within the case, the CFPB is alleging violations of the Fair Debt Collection Practices Act, the Consumer Financial Protection Act and New York state law in their suit.

If this case concerns you, please contact us by email at or simply comment below to let us know more about your situation. We plan to right this wrong any way we can.

We plan to provide updates on this pending case.

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