USA:FTC Imposes $4 Million Penalty Against Debt Collector

Court order prohibits defendants from continuing alleged deceptive practices and collecting debts and unnecessary fees. The penalty will be partially suspended for inability to pay in exchange for surrendered assets.

A Houston-based debt collection company and its president have agreed to follow a federal court order prohibiting them from allegedly deceptive tactics they have been using to collect debts and unnecessary fees from English and Spanish-speaking consumers.

According to a complaint filed by the Federal Trade Commission, the defendants violated the FTC Act and Fair Debt Collection Practices Act by using false and deceptive methods to collect more than $1.3 million in so-called “convenience fees” and “transaction fees” from consumers who authorized payments by telephone.

The defendants allegedly trained their collectors to deceive consumers into believing that payments were not accepted by U.S. mail and that the fees were unavoidable. In some instances, the fees were added to consumers’ accounts without their knowledge or consent, according to the FTC.

The FTC also alleges that the defendants’ collectors deceived both English and Spanish- speaking consumers by falsely claiming to speak for attorneys, falsely threatening to sue consumers who did not pay, and using deceptive schemes to coerce consumers into paying or providing their personal information.

“It’s illegal for debt collectors to lie, make false threats, use a false identity or trick people into paying a debt or an unauthorized fee,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “The FTC will continue to protect consumers from deceptive or abusive debt collection practices, regardless of whether the deception or abuse occurs in English, Spanish or any other language.”

The federal court order imposes a penalty of $4 million, which will be partially suspended based on inability to pay once the defendant surrenders assets totaling $100,000. The order prohibits the defendant and his company from repeating any of the unfair or deceptive practices alleged in the complaint, and it requires them to truthfully disclose information about any fees they charge, and the steps consumers can take to avoid paying.
Source: ACA4



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