The U.S. Federal Trade Commission (FTC) Wednesday issued its annual report on enforcement of the Fair Debt Collection Practices Act (FDCPA) in a letter to the Consumer Financial Protection Bureau (CFPB).
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB is required to submit annual reports to Congress on the Fair Debt Collection Practices Act, a task previously assigned to the FTC. The Bureau’s first report to Congress was submitted last year and the CFPB’s second report is due on March 20, 2013. To assist the CFPB in preparing its report, the FTC’s letter summarizes its own recent work on debt collection issues.
“The FTC remains vigilant in taking action against debt collectors who use illegal methods when collecting from consumers,” said Charles Harwood, Acting Director of the agency’s Bureau of Consumer Protection.
In the last 12 months, the FTC noted that it brought or resolved cases against four operations that allegedly used deceptive or abusive tactics to intimidate consumers:
- Defendants in the Forensic Case Management Services, Inc. case, who did business as Rumson, Bolling & Associates, settled charges with an order banning them from future debt collection activity. They allegedly threatened bodily harm to consumers, desecration of their deceased family members, and death to their pets if they did not pay. They also allegedly retained more fees from their clients than they had agreed to take. The Commission will collect more than $1.1 million.
- In the Luebke Baker case, the FTC settled with defendants that allegedly masked their identities using caller ID, falsely told consumers that magazine debts are exempt from statutes of limitations, and illegally threatened to garnish wages, among other violations of federal law.
- In the Goldman Schwartz case, the defendants’ allegedly illegal behavior included using insults, lies, false threats of imprisonment, and false claims of affiliations with attorneys and law firms, as well as charging unauthorized late fees and attorneys’ fees. Litigation continues.
- In AMG Services, Inc., the FTC alleged that a payday lender collecting on its own behalf charged inflated fees and made false threats that it would have consumers arrested, prosecuted, or imprisoned for failing to pay. Litigation continues.
The FTC also said that it had engaged in actions against three phantom, or scam, debt collection agencies. In each case, the defendants allegedly worked closely with overseas call centers; engaged in a scheme to defraud consumers, often for payday loans; and collected money that either wasn’t owed, or was never applied to the consumers’ actual debts. The American Credit Crunchers defendants were required to turn over approximately $170,000. Litigation in the other two cases continues.
In other debt collection and FDCPA regulation action, the FTC noted that it joined the CFPB and the Department of Justice in filing an amicus brief in the U.S. Supreme Court over attorneys fees awarded to prevailing defendants in FDCPA cases brought by consumers. The FTC’s research and policy activities over the past year included the agency’s recently announced debt buyer study, The Structure and Practices of the Debt Buying Industry.
- Collection Law Overview: A Look at the TCPA
- The Debt Collection Compliance Handbook
- Ask the Attorney Webinar Transcript – October 2012
- CFPB Examination Manual Sections Applicable to Debt Collectors