Federal Trade Commission (FTC) Actions Taken Against Debt Collectors

In 2004, Capital Acquisitions and Management Corp. (CAMCO), and its subsidiary, RM Financial Services, and four principals were accused of threatening and harassing thousands of consumers to get them to pay old, unenforceable debts or debts they did not owe have agreed to settle charges that their abusive and deceptive collection practices violated federal law. The FTC took action and a settlement was reached that prohibits the companies' alleged abusive debt collection practices in the future and requires the companies and their principals to pay a $300,000 civil penalty.

In 2004, Applied Card Systems, Inc., was charged with harassing consumers with multiple phone calls and abusive language and agreed to settle Federal Trade Commission charges that their business practices violated federal law. The FTC's complaint against Applied Card Systems alleged that, as part of the companies' debt collection practices, representatives repeatedly call third parties who had already told them they did not have any information about the consumers from whom the companies were trying to collect payments.

According to the FTC, representatives of Applied Card Systems, Inc., and Applied Card Systems of Pennsylvania, Inc., call third parties, including relatives, neighbors, and employers, attempting to get information about where consumers live or work in order to contact them about a delinquent debt. The FTC alleges that the representatives have continued to call these third parties, even after they have told the representatives that the consumer they are looking for does not reside or work with them. Many of the third parties requested that the representatives stop calling them. The FTC charges that, in many cases, the companies' representatives harassed the third parties with repeated phone calls, and abusive, sometimes obscene, language.

The consent order bars the respondents from: Contacting any third party more than once unless the third party requests that they do so, or unless they reasonably believe that the third party gave them incorrect or incomplete information and now has further information; Harassing third parties with abusive or obscene language or repeated phone calls; Communicating with a consumer to collect on a delinquent debt: (1) at a time or place the consumer has said is inconvenient; (2) at the consumer's place of employment if the consumer has already stated that the employer prohibits personal phone calls; and (3) if the consumer is represented by an attorney with respect to the debt; Falsely representing to consumers the amount or status of a debt or threatening to take action against a consumer that they do not intend to take or that is illegal to take; Collecting any amount other than the amount expressly stated in the agreement creating the debt; and Applying a consumer's payment in a way that the consumer has not directed.

In 2002, United Recovery Systems, Inc. (URS) agreed to pay a $240,000 civil penalty as part of a settlement with the Federal Trade Commission to resolve allegations that the company violated the Fair Debt Collection Practices Act (FDCPA). This is the FTC's first enforcement action against a debt collection company for allegedly violating the rights of Spanish-speaking consumers.

According to the FTC's complaint, on numerous occasions, in connection with the collection of debts in both English and Spanish, the company's debt collectors communicated with consumers at improper times or places, engaged in prohibited communications with third parties, harassed and abused consumers, and used deceptive practices to collect consumer accounts. In addition to the civil penalty, the proposed consent decree to settle the FTC charges includes broad prohibitions on future FDCPA violations and would require URS to inform consumers in writing that they may stop the company from contacting them about the debt and may contact a special URS phone number or address should they have a complaint about the way URS is collecting the debt. The settlement also includes a comprehensive consumer complaint and resolution program under which every consumer complaint about URS collection practices must be thoroughly investigated and responded to by the company.


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According to the FTC's complaint detailing the charges, when attempting to collect debts in both English and Spanish, URS repeatedly violated the FDCPA by: discussing details of the consumers' alleged debts with third parties, such as the consumers' parents, children, employers and co-workers; communicating with consumers at times or places that the company knew or should have known to be inconvenient, including at the consumers' place of employment; using language the natural consequence of which is to harass, oppress, or abuse; falsely stating or implying that failure to pay the debt could result in arrest, imprisonment, or garnishment of wages; and threatening to take action - such as filing a collection suit against the consumer - when the company did not intend to take such action.