Federal Trade Commission (FTC) Actions Taken Against Debt Collectors

The FTC has taken action against a handful of debt collection agencies / law firms for violations of the Fair Debt Collection Practices Act (FDCPA) and/or the Fair Credit Reporting Act.  Although a collection agency can face a stiff penalty and other sanctions, violations of the FDCPA are common and widespread, mostly due to the fact that many debt collectors are poorly trained and most agencies know they will get away with any violations.  If you believe a debt collector has violated your rights or the provisions of the FDCPA, you may file a complaint with the FTC at their website, www.ftc.gov.  Below are examples of some of the actions taken by the Federal Trade Commission against debt collectors over the last ten years or so:

In early 2012, Asset Acceptance, one of the largest buyers of consumer debt from credit card companies, health clubs, and telecommunications and utilities providers, has agreed to pay a $2.5 million civil penalty to settle FTC charges that it made a range of misrepresentations when trying to collect old debts. In addition, Asset Acceptance has agreed to tell consumers whose debt may be too old to be legally enforceable that it will not sue to collect on that debt. Asset Acceptance purchased tens of millions of consumer accounts for pennies on the dollar. It targeted accounts that, in some cases, were more than 10 years old.

In 2011, West Asset Management Inc., which employs 1,500 debt collectors in 13 states and has collected on more than 24 million accounts on behalf of clients in the healthcare, telecommunications, consumer credit, and government service industries, settled with the FTC for $2.8 million after the FTC received numerous complaints that West Asset Management violated the Fair Debt Collection Practices Act by calling consumers multiple times each day, often regarding accounts that did not belong to them, and sometimes using rude and abusive language. The FTC further charged that West Asset Management also illegally disclosed the existence of consumers’ debts to third parties and ignored consumers’ written demands that West Asset Management stop calling them. The FTC also alleged that West withdrew funds from consumers’ bank accounts or charged their credit cards without consent and falsely claimed that consumers would be sued, arrested, or have their property seized for nonpayment of their debt; that partial payments would be accepted as full settlement on accounts and that negative information would stay on consumers’ credit reports until debts were paid.  West Asset Management has collected on more than 24 million accounts on behalf of clients in the healthcare, telecommunications, consumer credit, and government service industries. As of 2011, the fine assessed against West Asset Management was the largest in FTC history.

In 2010, Allied Interstate, Inc., one of the nation’s largest debt collectors agreed to pay a $1.75 million fine for allegedly making repeated telephone calls to collect from the wrong person, to collect the wrong amount, or both. The settlement is the second largest civil penalty obtained by the FTC in a debt collection case (as of 2010). According to the FTC’s complaint, between 2006 and at least 2008, Allied Interstate, Inc. continued collection efforts even after consumers told the company they did not owe the debt, without verifying the accuracy of the disputed information.  The company also allegedly made improper harassing phone calls to consumers, using abusive language or calling many times a day for weeks or months, sometimes hanging up when the calls were answered. In addition, the complaint charges that Allied made repeat calls to third parties seeking to locate a consumer, revealed alleged debts to third parties without the consumers’ consent or court permission, and threatened legal action against consumers it did not intend to take.

In 2010, Credit Bureau Collection Services, agreed to pay a $1.1 million fine for allegedly violating federal law by inaccurately reporting credit information and pressing consumers to pay debts they often did not owe. According to the FTC’s complaint, the debt collection agency tried to collect invalid debts and reported them to the credit reporting agencies without noting that consumers disputed them. In addition, even after receiving information from consumers that a debt was paid off or did not belong to the consumer, the company continued to assert, no longer with a reasonable basis, that the consumer owed the debt, without trying to confirm or dispute the consumer’s information, in violation of the FTC Act.

In 2009, Oxford Collection Agency, Inc., agreed to pay the FTC $225,000 for calling consumers before 8 a.m. and after 9 p.m., calling them at work, revealing the debt to third parties, using abusive and vulgar language, and continuing to call even after receiving written demand to stop calling. Oxford also falsely threatened to garnish consumers’ wages, bring lawsuits against debtors, or have them arrested. The FTC originally imposed a penalty in excess of one million dollars, but the defendants couldn't pay it.

In 2009, the two owners of Academy Collection Service, Inc. settled a complaint filed by the FTC for about $675,000, but this was fine partially suspended because they could not pay.  The complaint alleged that Academy misled, threatened and harassed customers, deposited postdated checks early, threatened to garnish wages, seize or attach property if the consumer didn't pay, discussed consumers' debts with third parties, threatened physical violence, used vulgar and threatening language and called repeatedly throughout the day. 

In 2008, Rawlns & Rivera, Inc. and Ryan & Reed, Inc., debt collection agencies who operated in both Florida and Georgia, and a Florida attorney, Robert W. Bird settled an FTC action for $3.4 million (which defendants couldn't pay) for violating the Fair Debt Collection Practices Act.  The FTC accused the agency of using misleading collection letters and abusive telephone tactics threatening consumers with suit, wage garnishments, property seizures if they did not pay the debt.

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