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. Actions taken by the Federal Trade Commission 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. [Note: CAMCO is a "debt buyer", a company that buys old debts well past the statute of limitations and attempts to collect them. Most of the debts are unenforceable in court and are so old that they are beyond the reporting periods allowed under the Fair Credit Reporting Act. Some of the debts CAMCO allegedly attempted to collect were already discharged in bankruptcy or had been paid. The FTC charged that in their attempt to collect these debts, the companies engaged in abusive and deceptive collection practices, including: Harassing consumers at their workplaces; Discussing consumers' debts with third parties; Continuing to communicate with consumers after consumers had notified them that they did not owe the money and did not wish to be contacted again; Using obscene or profane language; Calling consumers continuously with the intention of annoying and abusing them; Falsely representing the amount and legal status of the debts; Misrepresenting themselves as attorneys; Threatening imprisonment, seizure, garnishment, attachment or sale of property or wages with full knowledge that such action could not legally be taken; Threatening to take action that could not be legally taken, including threatening to disclose the debts to consumers' employers and threatening to report the debt to consumer reporting agencies even though the debts are past the credit reporting periods; and Ignoring consumers disputes of the charges and continuing to harass them after consumers requested verification of the debts.] In 2002, D.C. Credit Services, Inc. and company co-owner, David Cohen, agreed to pay a $300,000 civil penalty as part of a settlement of Federal Trade Commission charges that they violated the Fair Credit Reporting Act (FCRA) and the Fair Debt Collection Practices Act (FDCPA). In addition to requiring the civil penalty, the consent decree to settle the charges would permanently ban defendant David Cohen from engaging in debt collection activity. The settlement also would require the defendants to notify consumer reporting agencies (often called "credit bureaus") to delete all adverse information the defendants previously had furnished to them over the past seven years. The consent decree would permit the defendants to re-report such adverse information only if, upon proper examination, they determine that the adverse information is accurate and reportable. According to the FTC's complaint, D.C. Credit Services and Cohen violated the Fair Credit Reporting Act (FCRA) by: furnishing information to a consumer reporting agency when they knew or consciously avoided knowing that the information was inaccurate; failing to notify promptly a consumer reporting agency that previously-furnished information is incomplete or inaccurate, after defendants had so determined; furnishing adverse information to consumer reporting agencies without disclosing that the consumer previously had disputed the information being reported; and falsely reporting the date of delinquency of a debt. Further, according to the FTC's complaint, in connection with the collection of debts, the defendants violated the FDCPA by: using language the natural consequence of which is to harass, oppress, or abuse consumers; communicating, and threatening to communicate, adverse credit information that the defendants knew or should have known was false; and furnishing adverse information to consumer reporting agencies without disclosing that the consumer had previously disputed the information being reported. Both D.C. Credit Services and David Cohen had previously executed consent decrees in 1992, relating to violations of the FDCPA. 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. 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. 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. 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