FTC Settles with Debt Collection Company for Violations of FTC Act and FDCPA

Consumer Finance Debt Collection FTC FDCPA

On March 24, the FTC entered into an agreement with a debt collection company and its owners (Defendants) to resolve allegations that Defendants had engaged in deceptive acts or practices in violation of the FTC Act and the FDCPA. Earlier in the month, the FTC filed a complaint against Defendants, claiming that Defendants collected “court fines, parking tickets, and debts for utility bills and other services on behalf of more than 500 municipalities in various states, including Alabama, Arkansas, Illinois, Kansas, Louisiana, Mississippi, Oklahoma and Texas.” The complaint alleges that Defendants used government letterhead to mislead consumers into thinking the letter was coming from a government agency. The complaint further asserts that Defendants sent consumers an initial warning letter, followed by a “FINAL NOTICE PRIOR TO ARREST” document, which falsely claimed that due to nonpayment, the consumer was subject to arrest, suspension of his or her driver’s license, and reporting to consumer reporting agencies. The agreement enters a civil penalty of $350,000 that must be paid within seven days and prohibits Defendants from misrepresenting debt collection practices and making unsubstantiated claims.