Debt Collection Agencies Settle in FTC Complaint
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Debt Collection Agencies Settle in FTC Complaint

August 11, 2014

Two debt collection agencies will be paying out money instead of trying to collect it.

A Memphis-based debt collector has agreed to stop deceiving and harassing consumers and otherwise violating federal debt collection laws, and will pay a $1.5 million civil penalty to settle Federal Trade Commission (FTC) charges, while a debt collection operation headquartered on Long Island will pay $490,000as a penalty to settle a separate FTC complaint.

In its complaint against Regional Adjustment Bureau, the FTC charges that the Memphis-based company used unfair and deceptive collection tactics, such as repeatedly calling consumers and accusing them of owing debts that they did not owe, contacting consumers at work while knowing that their employers did not allow the calls, making unauthorized withdrawals from consumers' bank accounts and disclosing confidential information about debtors to third parties. The company collects on about a million consumer accounts a year and is charged with violating the FTC Act and the Fair Debt Collection Practices Act (FDCPA).

The second complaint, which names Suffolk County-based Credit Smart, LLC and several associated companies and individuals, charges that Credit Smart used unfair and deceptive tactics, such as leaving pre-recorded messages for consumers that pretended to offer financial relief. In reality, there was no financial relief plan, and the messages were merely a ruse to get consumers on the line with debt collectors, according to the FTC.

The complaint also alleges that when collectors spoke to consumers, they would falsely threaten to sue them, which they had no plans to do, garnish their wages, or arrest them. The defendants also allegedly threatened to collect on old debts that were beyond the statute of limitations, refused to provide information about the debt that consumers were legally entitled to request, continued to attempt to collect on debts without a reasonable basis for telling consumers they owed the debt, told consumers they owed interest on debts when they didn't and revealed the debt to consumers' relatives, employers, and coworkers. The FTC charges that Credit Smart's tactics violated the FTC Act and the FDCPA.

Know Your Rights

The FTC offers tips for consumers who are being contacted by debt collectors.

  • Debt collection companies cannot speak to anyone other than you or your attorney about your debt. Debt collection companies can call relatives to find an alternate means of communication with you, but they cannot discuss the debt owed.
  • Debt collectors must send you a written validation notice telling you how much you owe within five days of contacting you.
  • Debt collectors cannot harass, oppress or abuse you or any third parties that they contact. This includes using threats of violence or using profane language.
  • Debt collectors cannot lie when they are trying to collect a debt.
  • Debt collectors cannot arrest you for not paying a debt, cannot seize your property or garnish your wages without a court order and cannot say they'll take legal action against you if they don't intent to.

If you believe that a debt collector is using unfair or illegal practices to collect a debt, report the company to the FTC, Consumer Financial Protection Bureau and your state's attorney general's office.