Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: FTC Targets Houston Debt Collection Operation, (Jan 31, 2013)

By Tobias J. Gillett, J.D., LLM.

The FTC has filed a complaint against Houston debt collection company Goldman Schwartz Inc., three affiliated companies, and three principals alleging that the company employed misrepresentations, abusive and threatening language, and unauthorized fees in the course of collecting debts from consumers (Federal Trade Commission v. Goldman Schwartz Inc., FTC File No. 1223096, Case No. 4:13-cv-00106).

The operation targeted by the FTC collected on debts owed to various payday lenders. The complaint alleges that the debt collection operation made extensive misrepresentations to consumers, including that it was a law firm and one of its principals was an attorney, that it was affiliated with local law enforcement agencies, that consumers had committed a crime by having a debt or issuing a check with insufficient funds, that the consumers could be imprisoned and their children taken away, that the status of their driver’s licenses would be negatively affected, that the operation would take legal action against the consumers, and that consumers owed certain fees.

The FTC also alleged that the operation harassed debtors by using abusive language, by calling repeatedly or continuously, and by calling at excessively early or late hours. Moreover, the operation allegedly disclosed consumers’ debt information unnecessarily, and collected fees, such as “late payment fees” and “attorney fees,” to which they were not entitled and which the creditors had not authorized. Furthermore, the operation purportedly failed to inform debtors of their rights to dispute the debts, to have the debts verified and to obtain the names of the original creditors. The operation’s conduct caused debtors “significant worry, mental anguish, embarrassment, and stress,” and caused some consumers to pay debts that they believed they did not owe or were overstated by the operation.

The FTC asserts that the operation’s actions violated the Federal Trade Commission Act and the Federal Debt Collection Procedures Act. The FTC has obtained a preliminary injunction against Goldman Schwartz Inc., doing business as Goldman, Schwartz, Lieberman & Stein; Debtcom, Inc., doing business as Cole, Tanner, & Wright; Harris County Check Recovery Inc.; The G. Wright Group Inc., doing business as The Wright Group; and three of the operation’s principals. The injunction enjoins the defendants from engaging in the debt collection business, freezes the operation’s assets, appoints a permanent receiver over it, prohibits release of customer information, and grants other equitable relief.

Companies: Goldman Schwartz Inc.; Debtcom, Inc.; Harris County Check Recovery Inc.; The G. Wright Group Inc.

News: ConsumerProtection FederalTradeCommissionNews