The Federal Trade Commission recently entered into a $3.4 million settlement with a Florida debt collection agency, its principals and attorney for alleged violations of the federal Fair Trade Commission Act and the federal Fair Debt Collection Practices Act. In its complaint, the FTC alleged that the defendants violated the FTCA and FDCPA when collecting consumer debts for small businesses by, among other things:

  • Making false threats that nonpayment would result in consumers being arrested, sued or having their wages garnished or property seized;
  • Threatening imminent legal action without the intent to take such action because, for example, the debt collector did not have the right as a third-party debt collector to bring legal action on its own behalf or authorization under its client contracts to bring legal action for its clients. Such threats were made, for example, within dunning letters stating “PLEASE CONSULT YOUR ATTORNEY” or “FINAL NOTICE PRIOR TO LEGAL REFERRAL”;
  • Informing consumers that they would be required to pay the debt collector’s costs and legal fees even though the debt collector did not have the legal authority to assess such costs and fees;
  • Misrepresenting themselves as attorneys;
  • Making false statements that an attorney had reviewed the consumer’s case and was preparing the case for legal action;
  • Demanding more than the amount of the debt if payment is not made immediately;
  • Calling consumers repeatedly or continuously and using abusive and profane language;
  • Misrepresenting the amount of time that a delinquent account could remain on a credit report;
  • Disregarding written verification requests and requests to cease communication; and
  • Communicating with third parties in connection with the collection of debts.

In addition to the monetary settlement, the defendants have agreed to (i) refrain from violating the FDCPA in any way, (ii) provide consumers with a toll-free number and mailing address for filing complaints, (iii) promptly investigate such complaints and (iv) take steps to cease, resolve and cure any violations of the settlement or the FDCPA.

Michael Tomkies and Chuck Gall