Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Debt collectors to pay $2M for allegedly deceptive practices, (Aug 8, 2014)

By Greg Hammond, J.D.

Debt collection companies Credit Smart, LLC and Regional Adjustment Bureau, Inc. (RAB) have settled charges they violated the FTC Act and Fair Debt Collection Practices Act (FDCPA) by allegedly engaging in unfair and deceptive collection tactics. The companies will pay a combined total of $2 million, the FTC announced (U.S. v. Credit Smart, LLC, File No. 122 3271, Case No. CV14-4650) (U.S. v. Regional Adjustment Bureau, Inc., File No. 112 3169, Case No. 2:14-cv-02522-JPM-tmp).

Credit Smart. In its complaint, the FTC alleged that Credit Smart used a variety of abusive and deceptive collection tactics that violated the FTC Act and FDCPA, including false threats of lawsuits, arrest, or imprisonment to pressure payment on debts, including debts that were beyond the applicable statute of limitations and debts the company did not have a reasonable basis to believe were owed in part or in whole. The company also purportedly left voice mail messages for consumers, falsely offering a “tax season relief program,” “hardship settlement,” “balance transfer option,” or “stimulus package.” However, when consumers would call back, the company’s representatives would attempt to collect debts, the agency charged.

The stipulated order imposes a monetary judgment of $1.2 million. However, Credit Smart will only be required to pay only $490,000, based on its inability to pay the full civil penalty. The company also will be prohibited from engaging in illegal debt collection tactics, and must provide consumers with two disclosures: one disclosure explaining consumers’ rights regarding the collection of time-barred debt, and one disclosure explaining how to file a complaint with the FTC if consumers feel they are being unfairly treated.

RAB. The FTC alleged that RAB also violated the FTC Act and FDCPA by withdrawing funds from consumers’ bank accounts without their express informed consent; contacting third parties regarding the debtor on numerous occasions; calling consumers at work with the knowledge that such calls are inconvenient or prohibited; disclosing the existence of consumers’ debt to consumers’ relatives, neighbors, employers, and co-workers; continuing to contact consumers and demanding payment after demands to cease communications; and calling consumers repeatedly with the intent to annoy, harass, or abuse.

RAB settled the FTC’s charges, and agreed to pay a civil monetary penalty of $1.5 million. The company also is permanently restrained from using any false, deceptive, or misleading representation or means to collect any debt, in violation of the FTC Act and the FDCPA. In addition, RAB will be required to close an account, or suspend or end its collection efforts if a consumer disputes the validity or the amount of a debt, until a reasonable investigation is conducted verifying the validity of the debt. The stipulated order also places restrictions on situations where RAB may leave voicemails that disclose the alleged debtor’s name and that the consumer owes a debt.

Companies: Credit Smart, LLC; Regional Adjustment Bureau, Inc.

News: ConsumerProtection FederalTradeCommissionNews