FTC Highlights Expanded Work on Debt Collection Issues over the Past Year
The FTC Enforces the Fair Debt Collection Practices Act and Promotes Related Education, Research, and Policy Development Initiatives
The Federal Trade Commission stepped up enforcement of the Fair Debt Collection Practices Act in the last year by cracking down on collectors who allegedly used abusive tactics to intimidate consumers, misled consumers while seeking payment on time-barred debts, used faulty data to identify debtors and the amount they owe, used deceptive tactics to collect on payday loans, and otherwise committed egregious violations of the Act and other federal laws, according to a letter the FTC sent to the Consumer Financial Protection Bureau.
“Protecting consumers from deceptive or abusive debt collectors is one of the most important things the FTC does,” said David Vladeck, Director of the agency’s Bureau of Consumer Protection.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB is required to submit annual reports to Congress on the Fair Debt Collection Practices Act, a task previously assigned to the FTC. The first CFPB report is due on March 20, 2012, and to assist the CFPB in preparing its report, the FTC’s letter summarizes its own recent work on debt collection issues.
Over the past year, the FTC has brought or resolved seven debt collection cases affecting hundreds of thousands of consumers. This is the highest number that it has brought or resolved in any single year. In two cases that included civil penalties, the FTC obtained $2.8 million and $2.5 million, respectively, for West Asset Management, Inc., and Asset Acceptance, LLC, the two largest civil penalty amounts the agency has ever obtained for alleged violations of the Fair Debt Collection Practices Act.
The FTC also filed actions against payday lenders American Credit Crunchers, LLC for allegedly making misrepresentations to collect on payday loan debts that they in fact weren’t authorized to collect on, or that consumers did not owe; and LoanPoint, LLC and Payday Financial, LLC for allegedly misrepresenting that they could lawfully garnish supposed debtors’ wages without obtaining a valid court order. The FTC charged two other debt collectors with especially egregious practices: Defendants in Forensic Case Management Service, Inc., doing business as Rumson, Bolling & Associates, allegedly threatened physical harm to consumers, desecration of their deceased family members, and killing of their pets to persuade consumers to pay. They also allegedly retained more fees from their clients than they had agreed to take. Defendants in Rincon Debt Management Services, LLC targeted English- and Spanish-speaking consumers, impersonating process servers and other officials, and falsely threatening to sue and arrest those whom they claimed owed money, the FTC alleged.