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N.Y. Cracks Down on Debt Collectors in $16 Million Accord

Two of the largest U.S. consumer debt buyers agreed to drop collections on about $16 million to settle allegations they pursued debtors in violation of New York law, an accord reached as federal regulators prepare to crack down on the growing industry.

Portfolio Recovery Associates LLC, based in Norfolk, Virginia, and Sherman Financial Group LLC also agreed to pay a combined $475,000 in penalties, Attorney General Eric Schneiderman said today. The firms, which buy mostly unpaid credit card debt at discounted prices and then get court judgments on the defaults, broke New York law by trying to collect obligations that were too old, the state said.