See also: Debt Kit -- Settle unsecured debts for less than half of amount owed Credit Kit -- Improve credit score and reduce monthly bills by $200+ |
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. Lundgren & Associates was based in the Sacramento, California, area. Alvin Lundgren now operates his business out of Mountain Green, Utah. The FTC's complaint, detailing the charges against Lundgren and his firm, alleges that on numerous occasions when attempting to collect debts, Lundgren used false, deceptive or misleading representations, including: falsely representing the character, amount, or legal status of a debt; threatening to take action that the defendants did not intend to take, such as filing a lawsuit; and falsely representing the compensation that which may be lawfully received by any debt collector for the collection of a debt. Additionally, the complaint charges that the defendants represented to debtors -- when collecting for NSF checks -- that the defendants had a right immediately to collect treble damages under state civil law and/or to collect additional amounts under state criminal law. Neither of these representations was true. In 2000, Performance Capital Management, Inc. (PCM), was fined $2 million and enjoined from what the FTC called "serious violations" of Section 623 of the Fair Credit Reporting Act (FCRA). According to the terms of the proposed settlement, payment of the fine would be waived due to the company's poor financial condition. PCM is a California corporation with headquarters in Irvine, California. It specializes in buying and collecting consumer debt that has been charged-off by the original creditor as uncollectible. PCM is currently in bankruptcy, and the Commission has waived the $2 million civil penalty based upon the financial condition of the company. In its complaint against PCM, the Commission alleges that PCM violated a number of requirements imposed by Section 623 of the Fair Credit Reporting Act (FCRA). First, the complaint alleges that PCM provided credit bureaus with inaccurate "delinquency dates" for its accounts. Section 623 defines the delinquency date for an account as the month and year that an account first became delinquent. This date is important because it is used by credit bureaus to measure the seven-year period that negative credit information may be reported under the FCRA. According to the Commission, PCM systematically reported accounts with delinquency dates that were more recent than the actual date of delinquency, resulting in negative information remaining on consumers' credit reports long beyond the seven-year period mandated by the FCRA. The Commission's complaint also alleges that PCM violated Section 623 by ignoring or failing to investigate consumer disputes referred by credit bureaus, and by failing to notify credit bureaus when consumers disputed collection accounts with PCM. The proposed settlement would require PCM to provide correct delinquency dates when reporting collection accounts to credit bureaus. The agreement also mandates the proper investigation of disputes. Where PCM learns during an investigation that account records no longer exist for a disputed debt, the company must delete the information from credit bureau files within five days. Finally, the agreement would require PCM to report as "disputed" all accounts where consumers have disputed the information with PCM. In 1996, United Creditors Alliance Corporation, a major nationwide debt collection agency, has agreed to pay a $146,000 civil penalty in settlement of Federal Trade Commission charges that it repeatedly violated the Fair Debt Collections Practices Act (FDCPA). The FTC alleged that United Creditors called after hours; used obscene, profane or abusive language; falsely threatened consumers with arrest, garnishment of wages, or other legal action and engaged in a variety of other FDCPA violations when attempting to collect debts from consumers. The FTC's complaint detailing the charges in this case cites numerous FDCPA violations, among them, that United Creditors: contacted consumers at times or places they knew or should have known to be inconvenient to the consumer, such as before 8 a.m or after 9 p.m.; called consumers at work when they knew the consumers' employers prohibited such calls; continued to contact consumers after having received written requests to cease doing so; used obscene, profane or abusive language; let telephones ring repeatedly at consumers' homes with the intent to annoy or harass; falsely represented that they were attorneys or that communications were from an attorney; contacted third parties about the debt; and falsely threatened that nonpayment of a debt would result in arrest or imprisonment, or that a consumer's wages would be garnished. In 1996, Allied Bond & Collection Agency, Inc. (Allied), agreed to settle Federal Trade Commission charges that it falsely threatened legal action against consumers from whom they were attempting to collect debts for clients, in violation of the Fair Debt Collection Practices Act (FDCPA). The FTC also charged that Allied contacted consumers at their places of employment even after they knew that the consumer's employer prohibited such contact. The company agreed to pay a civil penalty of $140,000. In 1995, Payco American Corporation agreed to pay $500,000 Civil Penalty to settle Federal Trade Commission allegations that it violated the Fair Debt Collection Practices Act (FDCPA) by illegally revealing consumer debts to third parties, using obscene or abusive language, and falsely threatening arrest, garnishment of wages, or other legal action against consumers from whom it was attempting to collect debts for clients. The settlement prohibits the Brookfield, Wisconsin-based company from violating the FDCPA in the future, and requires the company to give notice to all employees who are responsible for debt collection that they may be held liable individually if they are found to be violating the FDCPA. Payco is one of the country's largest debt collection agencies. The FTC's complaint detailing the charges in this case was filed in federal court in August 1993, and alleged that in Payco's attempt to collect debts, the company violated the FDCPA by, among other things: -- communicating with third parties for purposes other than acquiring location information about the consumer, without the consumer's express consent; contacting consumers at times or places they knew or should have known to be inconvenient to the consumer, such as before 8 a.m. or after 9 p.m.; calling consumers at work when they knew the consumers' employers prohibited such calls; using obscene, abusive or profane language; and letting telephones ring repeatedly at consumers' homes with the intent to annoy or harass. |
See also: Debt Kit -- Settle unsecured debts for less than half of amount owed Credit Kit -- Improve credit score and reduce monthly bills by $200+ |
