Federal regulators continued their fight against unscrupulous debt collectors today, ordering a Massachusetts organization to pay $2.5 million in refunds and penalties for illegally collecting unverified debt and providing inaccurate information to national credit reporting agencies. 

The Consumer Financial Protection Bureau announced today that it will require EOS CCA to refund at least $743,000 to consumers, and pay a $1.85 million civil money penalty for a slew of illegal 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.

Many of these debts were old accounts that had been previously sent to multiple collection agencies and contained several inaccuracies, including fraudulent, already paid, or settled debts.

Despite these issues, which EOS became aware of after acquiring the portfolio, 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.

While EOS tried to obtain sufficient documentation about the debts from AT&T, the complaint alleges that when that wasn’t possible, it still continued to report and collect on certain disputed debts.

The company also allegedly reported to CRAs that all three million of the debts it acquired were disputed by customers, when it knew not all of the accounts were disputed.

“EOS flip flopped on this twice, removing the dispute flags and then reinserting the dispute flags a month later,” the complaint states.

In all, the CFPB estimates that EOS’s unlawful collection and reporting practices resulted in consumers paying about $743,000 on more than 2,000 accounts that were disputed and unverified.

Under the proposed consent order [PDF], EOS must refund at least $743,000 to consumers, cease collecting and reporting disputed AT&T debt, stop collecting all unverified debts, ensure accuracy when providing information to CRAs and pay a civil penalty of $1.85 million to the CFPB.

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