Applied Card Systems, Inc. and Applied Card Systems of Pennsylvania, Inc. (collectively “ACS”) have settled charges brought by the FTC arising out of alleged violations of the Federal Trade Commission Act. ACS operates business enterprises that provide services to credit card companies, including, the collection of delinquent debts from consumers throughout the United States. ACS’s principal customer is its affiliate, Cross Country Bank, a Delaware-chartered bank (“CCB”). The FTC alleged that ACS violated the FTCA by calling non-debtor third parties in an attempt to either speak with a CCB cardholder or get location information about a cardholder after the third parties informed ACS that they did not know the cardholder or that the cardholder did not live at their residence. ACS allegedly made these calls without a reasonable belief that the third parties had correct or complete information about CCB’s cardholders. The FTC also alleged that ACS harassed these third parties by calling them repeatedly and using obscene, profane or abusive language.

The settlement, which was entered into by ACS without an admission of liability, prohibits ACS from engaging in the following conduct with respect to third parties:

  • Contacting them for the purpose of acquiring cardholder location information more than once without a request by the third party for subsequent calls or a reasonable belief that the third party has complete or correct location information for the debtor; and
  • Engaging in abusive conduct, such as using abusive language.

The settlement also prohibits ACS from taking the following action with respect to debtors:

  • Placing collection calls at any unusual or inconvenient time or place (a convenient time is presumed to be after 8 a.m. and before 9 p.m.);
  • Placing calls to a debtor’s place of employment if ACS has reason to know that such calls are employer-prohibited;

  • Communicating with a debtor if ACS knows (i) that the debtor is represented by an attorney and (ii) the attorney’s name and address, unless the attorney fails to respond within a reasonable time or consents to direct communication with the debtor;

  • Using false, deceptive or misleading representations;

  • Collecting amounts that are not legally due; and

  • Applying a payment to a disputed debt if the payment is made by a debtor owing multiple debts (ACS also is required to apply payments in accordance with debtor directions where applicable).

Finally, the settlement requires ACS to distribute copies of the settlement to company officials and employees and engage in certain monitoring, record keeping and compliance reporting activities.

  • Mike Tomkies and Charles Gall