FTC Actions Taken Against Debt Collectors
In 1999, Account Portfolios, Inc. (API), and a subsidiary, Perimeter Credit, L.L.C., have agreed to pay a $300,000 civil penalty as part of a settlement with the Federal Trade Commission to resolve allegations that they violated the Fair Debt Collection Practices Act (FDCPA) when attempting to collect delinquent health spa accounts they had purchased from Bally's Health and Tennis Corporation. According to the FTC, Perimeter's debt collectors harassed consumers, made false and misleading representations, failed to send required validation notices, failed to verify debts when requested to do so by consumers, and made impermissible third party contacts regarding consumers' debts. 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 Perimeter to inform consumers it contacts in writing that they may stop the company from contacting them about the debt.
According to the FTC's complaint detailing the charges, when attempting to collect delinquent Bally's accounts, Perimeter and API repeatedly violated the FDCPA by: calling consumers at work when they knew the consumers' employers prohibited such calls; calling consumers at times or places that they knew or should have known were inconvenient; communicating with third parties for purposes other than acquiring location information about consumers, without consumers' consent; communicating with consumers after consumers notified Perimeter, in writing, to cease further communication about the debt; using obscene or profane language; communicating or threatening to communicate to persons, credit information Perimeter knew, or should have known was false, and failing to communicate that a disputed debt is disputed; failing to notify consumers of their right to dispute and obtain verification of their debts, and to obtain the name of the original creditor; and continuing to try to collect debts after consumers disputed them in writing, and before the defendants verified the debts.
In 2000, North American Capital Corporation (NACC) agreed to pay a $250,000 civil penalty as part of a settlement with the Federal Trade Commission to resolve allegations that it violated the Fair Debt Collection Practices Act (FDCPA) when attempting to collect delinquent consumer credit accounts. According to the FTC, the company's debt collectors made impermissible third party contacts regarding consumers' debts, such as to the consumers' employers and co-workers; harassed consumers by using obscene or profane language; and made false and misleading representations, such as that the consumers' wages would be garnished and their property seized.
According to the FTC's complaint detailing the charges, when attempting to collect debts NACC repeatedly violated the FDCPA by: communicating with third parties about consumers' debts without consumers' consent, for purposes other than acquiring location information about consumers; using obscene, profane, or abusive language; falsely implying that failure to pay the debt could result in arrest, imprisonment, or garnishment of wages; and threatening to take action -- such as threatening to refer the matter for criminal prosecution -- when the company did not intend to do so.
In 1998, Alvin R. Lundgren, principal of Lundgren & Associates, P.C., (a California law firm), agreed to settle Federal Trade Commission charges that he repeatedly violated the Fair Debt Collection Practices Act (FDCPA) and Section 5 of the Federal Trade Commission Act when attempting to collect debts by threatening to take legal action when none was intended and by misrepresenting the amount he was entitled to collect under state law. Lundgren's practice was dedicated almost exclusively to the collection of insufficient fund checks (NSF checks) on behalf of check guarantee businesses and merchants. The proposed settlement to these charges would prohibit Lundgren from violating any provisions of the FDCPA in the future and would require him to include, for the next ten years, in any written communication with a consumer from whom he is attempting to collect a debt, two disclosures explaining to the consumer their rights under the FDCPA.
Handling Debt
Collectors
