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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 (globally)
Subsidiaries
  • Anchor Receivables Management
  • RDS

PRA Group, Inc. is a publicly traded global debt buyer based in Norfolk, Virginia.[2][3] PRA Group was listed in the Federal Trade Commission's 2013 Report on the Debt Buying Industry as one of the top five debt buyers in the US. According to SEC filings, PRA's revenue for 2017 was $813 million.[4]

History

PRA Group began as Portfolio Recovery Associates, LLC in March 1996[5] by co-founders Kevin Stevenson and Steve Fredrickson. Fredrickson is now the executive chairman of the board of directors. They started with four people out of a small office in Norfolk, Virginia. The company's debt purchasing activities began a few months after the company was formed, in May 1996.[6] The company's name was later changed to Portfolio Recovery Associates, Inc.[citation needed] Then in October 2014, the name was changed to PRA Group, Inc.[7] The PRA Group name and the design of its corporate logo were trademarked in 2014.[8]

In 2000, the company reported that it had purchased USD$1 billion of debt during the year, ranking in 10th place among top debt buyers.[9] By 2010, the company was noted as "the sixth-largest debt buyer in the U.S."[10]

PRA Group's initial public offering was in 2002 and was backed by William Blair & Company and Piper Jaffray.[3][11][12] The company is listed on the NASDAQ exchange and traded under the symbol PRAA.[13]

PRA's SEC filings for 2015 state that PRA has large international operations, due to its acquisitions of Aktiv Kapital, a Norway-based debt buyer and lender in Europe and Canada. In 2020, PRA Group expanded into Australia.[14]

For the past 26 years, PRA Group has been a Better Business Bureau accredited company.[15]

Litigation

In 2014, the Attorney General of New York obtained a settlement against PRA "for repeatedly bringing improper debt collection actions against New York consumers."[16] The case involved "uncontested default judgments" levied against defendants who failed to respond to suits brought by PRA against them.[16] The settlement required abandonment of claims against debtors (amounting to millions of dollars), changes in collection practices, and a civil fine of US$300,000.[16] In September, 2015, the Consumer Financial Protection Bureau, the regulator of the debt buying industry, made public a Consent Order against PRA, which was detailed in PRA's 2015 Annual Report to the SEC. As part of the Consent Order, PRA received a substantial fine and penalty, and must make restitution to some of its customers due to a variety of questionable debt collection practices.

Adverse regulatory actions

In September 2015, The Consumer Financial Protection Bureau (CFPB) ordered a subsidiary to pay $19 million in consumer refunds and an $8 million penalty, and stop collecting on over $3 million worth of debts. The CFPB found that the subsidiary:

  • Threatened and deceived consumers to collect on debts they should have known were inaccurate or had other problems.
  • 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 they knew they had no documentation for in hopes a consumer would default on their court date giving portfolio a default judgement.
  • Portfolio filed cases on debts that they knew were outside the statute of limitations.
  • Threatened that they were going to sue when an attorney had not even reviewed the case and made misrepresentations among other things.[17]

PRA's SEC filings for the calendar year 2015, page 92 and elsewhere, detail that the Internal Revenue Service conducted an audit of PRA of tax years 2005 to 2012. The IRS began litigation against PRA over a tax claim of at least $197 million in 2016. PRA Group settled with the IRS in 2017 over its Notices of Deficiency and PRA Group suffered no penalties or fines for late payment, with the IRS allowing repayment of the unpaid tax over four years without interest of the unpaid amount.[18][19] PRA Group changed its tax calculation approach and no longer used the cost recovery accounting method for accounts thereafter in order to comply with the IRS settlement.[20]

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]

Business model

PRA purchases charged off consumer debt from banks and other creditors, returning some of the value of the amount owed to lenders. The company then tries to recover some of the debt.[24]

The company applies predictive computational models when considering acquisition of a debt portfolio to help assess the potential return on investment, as well as on its existing portfolio to conduct ongoing review of its collection strategy.[25]

Operations

The company's headquarters are located in Norfolk, Virginia.[26]

In 2000, the company established a call center in Hutchinson, Kansas.[27] By late 2001, this facility employed 75.[6]

In 2001, the main facility of the company was in the Riverside Commerce Center in Virginia Beach, Virginia, which employed 380 "collectors/supervisors".[6]

The overall employment figure for 2002 was 590, across all sites and divisions.[11]

Also by 2002, about 50% of the company's debt portfolio (the spectrum of debts purchased) had come from major credit card issuers Visa, MasterCard and Discover.[11] The overall portfolio had a "face value" (the amount owed) of US$4,170,000,000 across 1.5 million individual accounts.[11]

As shown in its 2015 SEC filings, for the year ending December 31, 2015, PRA had revenues of $942 million, and $880 million in 2014.

PRA Group formalized its Diversity, Equity and Inclusion strategy in 2020, appointing a Director of Diversity and Inclusion, and forming a Diversity and Inclusion Steering Committee (DISC), composed of a diverse slate of employees from various locations and business units.[28]


Subsidiaries

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.[29][30][31]

Controlling interests

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".[10]

References

  1. ^ http://files.shareholder.com/downloads/PRAA/715398218x0x744826/259AE99A-46DA-4623-BD1D-6909EFA24470/PRA_2013AR_29315_2_.pdf annual report
  2. ^ Cackley, Alicia Puente, ed. (September 2009). Credit Cards: Fair Debt Collection Practices Act Could Better Reflect the Evolving Debt Collection Marketplace and Use of Technology (Report). Government Accountability Office. p. 7. ISBN 9781437924572. GAO-09-748.—via Google Books
  3. ^ a b Gill, Stephen; Cutler, A. Claire, eds. (2014). "New constitutionalism disciplinary neoliberalism". New Constitutionalism and World Order. Cambridge University Press. p. 243. ISBN 9781107053694.
  4. ^ "Form 10-K". U.S. Securities and Exchange Commission. 27 February 2018.
  5. ^ "Timeline". PRA Group. 1996. Retrieved 2 February 2015.[self-published source]
  6. ^ a b c 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.
  7. ^ 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]
  8. ^ "Uspto Issues Trademark: Pra Group". US Fed News Service. 14 November 2014. Archived from the original on 29 March 2015.
  9. ^ 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.
  10. ^ 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.
  11. ^ a b c d 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.
  12. ^ Damodaran, Aswath (2004). Investment Fables: Exposing the Myths of "can't Miss" Investment Strategies. Upper Saddle River, New Jersey: FT Press. p. 289. ISBN 9780131403123.—via Google Books
  13. ^ "PRAA Stock Quote". NASDAQ. Retrieved 2 February 2015.
  14. ^ Davies, Nick (November 24, 2021). "New location for PRA Group as they grow within the Australian Market". Colliers.
  15. ^ "Portfolio Recovery Associates, LLC | Better Business Bureau® Profile". www.bbb.org. Retrieved 2022-07-14.
  16. ^ 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.
  17. ^ http://blog.credit.com/2015/09/2-of-americas-largest-debt-collectors-will-refund-60-million-to-consumers-125132/ 2 of America’s Largest Debt Collectors Will Refund $60 Million to Consumers
  18. ^ PRA Group Agrees to Settle with IRS . PRA Group (2017-05-15). Retrieved 2020-12-02.
  19. ^ BRIEF-PRA Group agrees to settle with IRS[dead link]. Reuters (2017-05-15). Retrieved 2020-12-02.
  20. ^ Bauer, Tim (2017-05-16). PRA Group Announces Settlement with IRS. Inside Arm. Retrieved 2020-12-02.
  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. ^ "Turnips can bleed: The Portfolio Recovery story". The Virginian-Pilot. Retrieved 2016-12-06.
  25. ^ "Portfolio Recovery Associates Selects SAS[R] for Proprietary Modeling". Marketing Weekly News. 2010.
  26. ^ Landis, David (November 2007). "When the news is bad, this company WINS". Investing. Kiplinger's Personal Finance: 62 – via Google Books.
  27. ^ 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.
  28. ^ "Doing Justice: Women Ex-Offenders as Group Facilitators, Advocates, and Community Educators", Practicing Social Justice, Routledge, pp. 161–178, 2013-04-15, doi:10.4324/9780203725504-15, ISBN 978-0-203-72550-4, retrieved 2022-07-14
  29. ^ "U.S. Securities and Exchange Commission on PRA Group, Inc. (2 March 2015) Form 10-K (Report)".
  30. ^ "Bloomberg Business: PRA Group Company Description. Retrieved November 5, 2015". Bloomberg News.
  31. ^ "ACA International: "PRA Group and Encore Capital Group Reach Settlement with CFPB." September 9, 2015".
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