Alert January 22, 2013

FTC Targets Debt Collector Allegedly Engaged in Violations of the FTC Act and the FDCPA

The FTC announced a settlement with a debt collection company for violations of the Federal Trade Commission Act and the federal Fair Debt Collection Practices Act on grounds that defendants subjected consumers to abusive debt collection practices and deceived their small business clients. The complaint alleged that, in violation of the FDCPA, which generally prohibits deceptive, abusive, and unfair debt collection practices, defendants subjected consumers to obscene and profane language, threatened physical harm, lawsuits and arrest and improperly disclosed consumers’ debts to employers and other third parties. Further, in violation of the FTC Act, defendants deceived their small business clients by advertising that they would work on a contingency basis, but instead kept all of the proceeds or more than they were entitled to and also sought and obtained additional fees (e.g., filing or processing fees) from clients, and “neither undertook the promised legal action to collect the debt nor refunded fees paid by the client. In addition, the FTC separately settled with related parties who received funds from the above mentioned debt collection practices.