Today, the FTC—in tandem with Federal and state regulators and attorneys general—announced a sweeping law enforcement action dubbed Operation Corrupt Collector. The action targets collectors who engage in unauthorized collection of debt or collection of state debt, including the use of abusive collection practices. The broad sweep includes 50 enforcement actions brought by the Federal regulators and 16 states.
The group of regulators and AGs held a press conference today about Operation Corrupt Collector. The conference included comments by Andrew Smith, Director of the FTC’s Bureau of Consumer Protection, and Leticia James, Attorney General of the state of New York. Smith noted that such corrupt collection practices harm legitimate debt collectors who are trying to do things by the book.
The conference announced two recently-filed cases by the FTC, which are described in the FTC’s press release. The first, against National Landmark Logistics, LLC, which alleges:
[T]he defendants used robocalls to leave deceptive messages claiming consumers faced imminent legal action about debts. When consumers returned the calls, the defendants falsely claimed to be from a mediation or law firm, again threatened legal action, and used consumers’ personal information to convince consumers the threats were real. The complaint alleges that, in many instances, consumers did not owe the debt being collected on or the defendants had no right to collect it.
The second, against Absolute Financial Services, LLC, alleges:
[T]hat the company used the defendants in the National Landmark Logistics case (above) to place deceptive robocalls alleging that consumers owed debt and faced legal action if they did not reply. Once consumers called the defendants after receiving the message, the defendants often falsely claimed to be representing a law firm or threatened consumers with arrest if they did not immediately pay the debt. According to the complaint, the defendants used consumers’ personal information (provided by the National Landmark defendants) to convince consumers that the debt was legitimate.
Assuming these allegations are true, insideARM applauds these regulators and Attorneys General for cracking down on these types of practices. As Smith mentioned, these types of egregious actions—such as threatening arrest, inflating amounts owed, and illegally posing as attorneys—harm legitimate debt collectors who are trying to do things by the book. Debt collection is an important piece of the consumer credit puzzle. Bad actors cause consumers and regulators to be skeptical of legitimate debt collectors, making their job more difficult. Actions that pluck bad actors out of the market help both consumers and legitimate collectors.