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PRA Group

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PRA Group, Inc.
Formerly
  • Portfolio Recovery Associates, LLC 1996–
  • Portfolio Recovery Associates, Inc. –2014
Nasdaq: PRAA[1]
S&P 600 Component
FoundedMarch 1996; 28 years ago (1996-03) (as Portfolio Recovery Associates, LLC )
Norfolk, Virginia, U.S.
Headquarters
Norfolk, Virginia
,
United States
Key people
Vikram Atal (President and CEO)
Number of employees
3,277
Subsidiaries
  • Anchor Receivables Management
  • RDS

PRA Group, Inc. is a publicly-traded debt buyer and debt collection company based in Norfolk, Virginia. The company buys delinquent consumer debt from credit card issuers and other financial institutions at a discount and pursues collection of the full debt owed. Founded in 1996, PRA Group employs more than 3200 people in 18 countries.[2][3]

Portfolio Recovery Associates has been sued and fined by entities including the Consumer Financial Protection Bureau and the Attorney General of New York for illegal debt collection tactics, threatening and misleading consumers, consumer reporting violations, and malicious prosecution.[4][5] [6]

History

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PRA Group was founded as Portfolio Recovery Associates, LLC in March 1996 by Kevin Stevenson and Steve Fredrickson, who worked previously in collections at Household Finance.[3] With a staff of four in Norfolk, Virginia, the company began to purchase debt in May 1996.[7] In 2000, PRA purchased $1 billion of debt. Then operating as Portfolio Recovery Associates Inc., it was ranked as the tenth largest debt buyer in the United States.[8]

In 2000, the company established a call center in Hutchinson, Kansas.[9] 75 bill collectors worked from the Hutchinson call center in 2001. The main call center, which employed 380 collectors and supervisors, was located in the Riverside Commerce Center in Virginia Beach, Virginia.[7]

In 2002, about 50% of the company's debt portfolio had come from major credit card issuers including Visa, MasterCard and Discover. The portfolio had a value of $4.7 billion, based on money owed by 1.5 million individual debtors. In 2002, PRA had 590 employees across all sites and divisions.[10]

PRA went public on November 8, 2002. Its IPO raised $50.7 million through the sale of 3.9 million shares of its stock at $13./share.[11] By February 2003, it was trading at 60% above its $13 offering price.[12] A second stock offering in May 2003 consisted largely of sales by insiders; the cofounders of PRA and an officer of the company collectively cleared $12.2 million from the offering.[3][13]

In April 2010, PRA secured a controlling interest in the company Claims Compensation Bureau, which specialized in "recovering funds and processing payments owed under class-action settlements".[14]

In 2013 PRA was listed in the Federal Trade Commission's report on the debt buying industry as one of the top five debt buyers in the US. Based on SEC filings, PRA's revenue for 2017 was $813 million.[15] In October 2014, the company name was changed from Portfolio Recovery Associates, Inc. to PRA Group, Inc.[16][17]

In 2015 PRA Group acquired Aktiv Kapital, a Norway-based debt buyer and lender in Europe and Canada. In 2020, the company expanded into Australia.[18]

Litigation and regulatory actions

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In 2014, the Attorney General of New York obtained a settlement against PRA "for repeatedly bringing improper debt collection actions against New York consumers."[19] The case involved uncontested default judgments levied against defendants who failed to respond to suits brought by PRA against them.[19] The settlement required the abandonment of claims against debtors, changes in collection practices, and a civil fine.[19]

In May 2015, a jury ordered Portfolio Recovery Associates to pay $82,990,000 in punitive damages for the malicious prosecution of Maria Guadalupe Mejia, a Kansas City woman who was pursued by PRA for a $1000 credit card debt she did not owe. The company was also fined $250,000 for violating the Fair Debt and Collection Practices Act.[20]

In September 2015, The Consumer Financial Protection Bureau (CFPB) ordered PRA to pay an $8m penalty and issue $19 million in consumer refunds. The company was also ordered to cease collection attempts on debt totaling more than $3 million. The CFPB found that PRA:

  • Threatened and deceived consumers to collect on inaccurate debts;
  • Stated incorrect balances, interest rates, and payment due dates in attempting to collect debts from consumers;
  • Failed to provide documentation on debts;
  • Filed court cases without documentation to mislead consumers, and collected default judgments when consumers failed to appear in court;
  • Filed cases on debts that they knew were outside the statute of limitations.

A 2019 court case between PRA Group's UK subsidiary and a debtor – Doyle vs PRA Group (UK) Ltd – clarified UK law around statute-barred debt, with the judge ruling that creditors were unable to pursue a debt if no action had been taken within six years of the initial default.[21][22][23]

In March 2023, PRA was fined $24 million for continued illegal debt collection practices and consumer reporting violations. The director of the agency stated that following the 2015 action, PRA continued "violating the law through intimidation, deception, and illegal debt collection tactics and lawsuits."

In 2024, PRA paid $5.5 million to settle a class action lawsuit that alleged the company violated North Carolina debt collection law by obtaining default judgments against debtors without filing sufficient evidence to substantiate the debts claimed to be owed. [24]

Subsidiaries

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PRA Group's subsidiaries include Portfolio Recovery Associates, LLC, which purchases and collects debt; PRA Receivables Management, LLC, which acquires and services bankrupt and insolvent accounts; PRA Location Services, which helps auto lenders and insurance companies recover missing collateral; and Claims Compensation Bureau (CCB), which monitors and files class action claims on behalf of institutional investors and corporate clients.[25][26][27][14]

References

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  1. ^ Annual report
  2. ^ French, David (December 13, 2023). "Activist Engaged Capital takes stake in debt collector PRA -sources". Reuters.
  3. ^ a b c Epstein, Gene. "Overplayed Hand - Barron's". barrons. Retrieved 2023-12-21.
  4. ^ "CFPB Orders Repeat Offender Portfolio Recovery Associates to Pay More Than $24 Million for Continued Illegal Debt Collection Practices and Consumer Reporting Violations". Consumer Financial Protection Bureau. 2023-03-23. Retrieved 2023-12-20.
  5. ^ Carrns, Amy (September 9, 2015). "Debt Collectors to Pay $61 Million in Consumer Refunds and Amend Their Practices". New York Times. Retrieved December 20, 2023.
  6. ^ "N.Y. Cracks Down on Debt Collectors in $16 Million Accord". Bloomberg.com. 2014-05-08. Retrieved 2023-12-20.
  7. ^ a b Snider, Jody (12 November 2001). "Debt Recovery Proves Profitable for Virginia Beach, Va., Company". Knight Ridder/Tribune Business News. Archived from the original on 29 March 2015.
  8. ^ Staff (1 January 2002). "Top Debt Buyers". Collections & Credit Risk. SourceMedia. Archived from the original on 29 March 2015. Face value totals based on self-reported numbers for Collections Source One.
  9. ^ Shean, Tom (25 August 2000). "Businesses in Norfolk, Va.-Area Wait for Verizon Strike to End". Knight Ridder/Tribune Business News. Archived from the original on 29 March 2015.
  10. ^ Shean, Tom (7 September 2002). "Norfolk, Va., Bill Collector Hopes to Raise $50 Million from Investors". Knight Ridder/Tribune Business News. Archived from the original on 29 March 2015.
  11. ^ Simpson, Burney. (February 2003), "Taking stock of a rising agency", Credit Card Management; New York Vol. 15, Iss. 12, pp 30-34.
  12. ^ Hennessy, Raymond (February 10, 2003), "Deals & Deal Makers -- IPO Outlook: No News Is Old News for New Issues --- Infinity Property Pulls Deal As IPO Drought Continues", Wall Street Journal, Eastern edition; p. C4
  13. ^ Landis, David (November 2007). "When the news is bad, this company WINS". Investing. Kiplinger's Personal Finance: 62 – via Google Books.
  14. ^ a b Staff (7 May 2010). "Portfolio Recovery Associates Beats Wall Street's Expectations. (News)". Cardline. SourceMedia. Archived from the original on 29 March 2015.
  15. ^ "Form 10-K". U.S. Securities and Exchange Commission. 27 February 2018.
  16. ^ PRA Group, Inc. (10 November 2014). 10Q (Report). U.S. Securities and Exchange Commission. p. 31. SEC Accession No. 0001185348-14-000047.[self-published source]
  17. ^ "Uspto Issues Trademark: Pra Group". US Fed News Service. 14 November 2014. Archived from the original on 29 March 2015.
  18. ^ Davies, Nick (November 24, 2021). "New location for PRA Group as they grow within the Australian Market". Colliers.
  19. ^ a b c "A.G. Schneiderman Announces Settlements with Two Major Consumer Debt Buyers for Unlawful Debt Collection Actions for Years, Portfolio Recovery Associates and Sherman Financial Group Obtained Judgments against New York Consumers Based upon Untimely Claims Schneiderman: Debt Collectors Must Abide by Same Rules as the Rest of Us" (Press release). New York Attorney General. 8 May 2014. Archived from the original on 29 March 2015.
  20. ^ "Jury Awards KC Woman $83 Million In Debt Collection Case". KCUR - Kansas City news and NPR. 2015-05-14. Retrieved 2024-11-22.
  21. ^ Statute barred debt – common questions. Debt Camel. Retrieved 2020-12-02.
  22. ^ Doyle vs PRA Group (UK) Ltd. England and Wales Court of Appeal (Civil Division) Decisions. Retrieved 2020-12-02.
  23. ^ Court of Appeal rule on whether a creditor is prevented by limitation from bringing a claim to enforce a 21-year-old credit card debt. AddleShawGoddard (2019-01-30). Retrieved 2020-12-02.
  24. ^ Childress, Greg (July 19, 2024). "North Carolina consumers score court win against one of nation's largest debt-buyers". NC Newsline. Retrieved 2024-11-22.
  25. ^ "U.S. Securities and Exchange Commission on PRA Group, Inc. (2 March 2015) Form 10-K (Report)".
  26. ^ "Bloomberg Business: PRA Group Company Description. Retrieved November 5, 2015". Bloomberg News.
  27. ^ "ACA International: "PRA Group and Encore Capital Group Reach Settlement with CFPB." September 9, 2015".
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