Posts Tagged ‘FTC’
Firm Also Will Notify Consumers with “Time-Barred” Debt That It Will Not Sue to Collect
One of the nation’s largest consumer debt buyers has agreed to pay a $2.5 million civil penalty to settle Federal Trade Commission charges that it made a range of misrepresentations when trying to collect old debts. In addition, the company, Asset Acceptance, LLC, has agreed to tell consumers whose debt may be too old to be legally enforceable that it will not sue to collect on that debt.
The proposed settlement order resolving the agency’s charges also requires that when consumers dispute the accuracy of a debt, Asset Acceptance must investigate the dispute, ensuring that it has a reasonable basis for its claims the consumer owes the debt, before continuing its collection efforts. The proposed order also bars the company from placing debt on consumers’ credit reports without notifying them about the negative report. The U.S. Department of Justice filed the proposed settlement order this week at the FTC’s request.
“Most consumers do not know their legal rights with respect to collection of old debts past the statute of limitations,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection. “When a collector tells a consumer that she owes money and demands payment, it may create the misleading impression that the collector can sue the consumer in court to collect that debt. This FTC settlement signals that, even with old debt, the prohibitions against deceptive and unfair collection methods apply.”
The FTC’s action – alleging that Asset Acceptance violated the FTC Act, the Fair Debt Collection Practices Act, and the Fair Credit Reporting Act – is part of the FTC’s continuing efforts to protect consumers adversely affected by the struggling economy. The agency today also issued a new publication for consumers, “Time-Barred Debts: Understanding Your Rights When It Comes to Old Debts”.
Michigan-based Asset Acceptance buys unpaid debts from credit originators such as credit card companies, health clubs, and telecommunications and utilities providers, as well as other debt buyers, and attempts to collect them. Asset Acceptance has purchased tens of millions of consumer accounts for pennies on the dollar. It targets accounts that other collectors have pursued and are more than a year past due, and in some cases attempts to collect debt that is more than 10 years old. Some of this debt is too old to be legally enforceable – state statutes of limitations cut off the right to sue to collect the debt after some period of time has passed, depending on the state and the type of debt. And many consumers do not know that making a partial payment of a debt may reset the state law’s clock on the collector’s ability to take legal action.
The FTC’s nine-count complaint charged Asset Acceptance with:
- misrepresenting that consumers owed a debt when it could not substantiate its representations;
- failing to disclose that debts are too old to be legally enforceable or that a partial payment would extend the time a debt could be legally enforceable;
- providing information to credit reporting agencies, while knowing or having reasonable cause to believe that the information was inaccurate;
- failing to notify consumers in writing that it provided negative information to a credit reporting agency;
- failing to conduct a reasonable investigation when it received a notice of dispute from a credit reporting agency;
- repeatedly calling third parties who do not owe a debt;
informing third parties about a debt;
- using illegal debt-collection practices, including misrepresenting the character, amount, or legal status of a debt; providing inaccurate information to credit reporting agencies; and making false representations to collect a debt; and
- failing to provide verification of the debt and continuing to attempt to collect a debt when it is disputed by the consumer.
The proposed settlement requires that when Asset Acceptance knows or should know debt may not be legally enforceable under state law – often referred to as “time-barred” debt – it must disclose to the consumer that it will not sue on the debt and, if true, that it may report nonpayment to the credit reporting agencies. Once it has made that disclosure, it may not sue the consumer, even if the consumer makes a partial payment that otherwise would make the debt no longer time-barred.
The order also prohibits the company from:
- Making any material misrepresentation to consumers and making any representation that a consumer owes a particular debt, or as to the amount of the debt, unless it has a reasonable basis for the representation. To ensure it has such a basis, the order requires Asset Acceptance to investigate consumer disputes before continuing collection efforts;
- “Parking” – or placing – debt on a consumer’s credit report when it has failed to notify the consumer in writing about the negative report, and;
- Violating the Fair Credit Reporting Act and the Fair Debt Collection Practices Act, in the ways alleged in the complaint.
The FTC has issued a new publication to help consumers understand how debt collectors attempt to collect old debts, along with their rights in these cases. “Time-Barred Debts: Understanding Your Rights When It Comes to Old Debts” provides information on when a debt is too old for a collector to sue, what consumers should do if a debt collector calls about a time-barred debt, and whether a consumer should pay a debt that’s considered time-barred. It also provides advice on what consumers should do if they are sued for a time-barred debt, including defending themselves in court and asserting their rights under the Fair Debt Collection Practices Act. Finally, it has links to other FTC publications and videos about dealing with debt.
The Commission vote authorizing the staff to refer the complaint to the Department of Justice was 4-1, and the vote to approve the proposed consent decree, was 3-1, with Commissioner J. Thomas Rosch voting no for both. The DOJ filed the complaint and proposed consent decree on behalf of the Commission in U.S. District Court for the Middle District of Florida today. The proposed consent decree is subject to court approval.
NOTE: The Commission authorizes the filing of a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. This consent decree is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent decrees have the force of law when signed by the District Court judge.
Story Source from: Under FTC Settlement, Debt Buyer Agrees to Pay $2.5 Million for Alleged Consumer Deception
The Federal Trade Commission (FTC) alleges that debt collection agency, West Asset Management, violated the Fair Debt Collections Practices Act (FDCPA) on multiple occasions, leading to thousands of consumer complaints.
Century Negotiations President Amy Michalo-Rojas urged clients, and the general public, to stay informed about these types of cases so they can recognize when a debt collector violates their legal rights.
West Asset Management allegedly violated the FDCPA—the law designed to protect consumers against deceptive and harassing debt collection tactics—by calling consumers multiple times a day, using rude and abusive language, taking funds without consumer permission, falsely claiming consumers would be jailed or sued, and even contacting consumers regarding debts that did not belong to them.
“Many factors can inspire a debt collector to break the law, from an unethical work environment to the challenge of collecting in a recessed economy,” explained Michalo-Rojas. “But individual consumer awareness and reported complaints can stop these violators and warn potential lawbreakers against similar behavior.”
Read the entire story here: Unscrupulous Debt Collection Agency Pays Record Settlement, Offers Lesson in Consumer Awareness, Says Century Negotiations
Each year the Federal Trade Commission (FTC) provides Congress with a report on the Fair Debt Collection Practices Act (FDCPA). While the report focuses heavily on the number of complaints received from consumers, it also summarizes actions that the FTC has taken to “curtail deceptive, unfair, and abusive debt collection practices.”
As in years past, the FTC received more complaints about the debt collection industry than any other industry. In 2009, the FTC received 119,364 complaints about first- and third-party debt collectors, up from 104,766 in 2008—an increase of nearly 15,000 complaints. With that said, it is important to point out that the FTC does not investigate each complaint to determine if there was an actual violation of the law. The FTC acknowledges that not all of the complaints received are violations of the Act. It is also worth noting that although the total number of complaints increased, so did the number of consumers who fell past due on credit obligations. An increase in the number of past due consumers opens the door for an increase in the number of complaints.
We encourage you to download and review the 2010 FDCPA report in its entirety to become familiar with its contents, and if you haven’t reviewed the Fair Debt Collection Practices Act lately, you might consider doing so while this article has your attention.
We review the top five FDCPA complaints received by the FTC in 2009 and point you to the corresponding section of the FDCPA.
#5 Communicating with Third Parties Repeatedly to Obtain Location Information.
“This past year, 19.2% of complaints, or 16,926 complaints, claimed that collectors called a third party repeatedly to obtain location information …”
The FDCPA §804(3) says: A debt collector shall not communicate with a third party more than once unless requested to do so by the third party, or unless the debt collector reasonably believes that the earlier response of the third party was erroneous or incomplete and that the third party now has correct and complete location information.
#4 Threatening Action Which Cannot or Is Not Intended to Be Taken.
“In 2009, 20.9% of FDCPA complaints, or 18,438 complaints, reported that third party collectors falsely threatened a lawsuit or some other action that they could not or did not intend to take…”
The FDCPA §807(5) says: A debt collector shall not threaten to take any action that cannot legally be taken or that is not intended to be taken.
#3 Failing to Send the Required Validation Notice.
“Last year, 25.7% of the FDCPA complaints, or 22,708 complaints, reported that collectors did not provide the required notice….”
The Fair Debt Collection Practices Act §809(a) says: Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice …” (The notice is referred to as the Validation Notice and includes the amount of the debt, name of the creditor, and important information regarding disputes and verification.
#2 Demanding a Larger Payment Than is Permitted by Law.
“This category includes two different FDCPA law violation codes. First, the FDCPA prohibits debt collectors from misrepresenting the character, amount, or legal status of the debt. Other complaints in this category state that collectors have sought to collect on debts that have been discharged in bankruptcy. In 2009, 31.1%, or 27,420 FDCPA complaints, described this conduct.”
The FDCPA §807(2) says: A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. This includes the false representation of the character, amount, or legal status; or any services rendered or compensation which may be lawfully received by any debt collector for the collection of a debt.
#1 Calling Repeatedly and Continuously.
“In 2009, 46.5% of FDCPA complaints the FTC received, or 41,028 complaints, claimed that collectors harassed the complainants by calling repeatedly or continuously.”
The Fair Debt Collection Practices Act §806(5) says: A debt collector may not cause a telephone to ring or engage any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.”
Article Source: http://www.insidearm.com/thecomplaintsissue/top-five-FDCPA-complaints.cfm
Third party debt collectors break the law by violating the Fair Debt Collection Practices Act (FDCPA). The FDCPA is enforced by the Federal Trade Commission (FTC) to direct and monitor debt collection practices by third party collectors.
The FDCPA has laid down the guidelines for fair collection practices in order to protect consumers from being harassed by mean debt collectors. A creditor has a right to collect payment from you. But, debt collectors by no means are creditors; they are third party collectors and should not be allowed to browbeat you into believing their superiority.
In reality debt collectors are employed for a meager salary by debt collection agencies and are paid based on their collection abilities. Some debt collection agencies buy debts from original creditors for a discounted amount of the original debt. If a debt collector is actually successful in collecting money from you, the collectors take the major share of the money and give the creditors a share of the collection. Some creditors wash their hands off the debt by completely selling the debt. To collect payment on such debts, and to make the most of the debt, collectors resort to unethical means.
Some large financial institutions have large receivable departments like mortgage, home loan and health care companies. These companies employ ‘in house’ collectors to collect their debts. These collectors are not considered as ‘debt collectors’ by the FDCPA and therefore do not have to follow many rules under the FDCPA.
In a recent debt collection case, a consumer from Richmond, Virginia, was harassed by NCO Financial Systems for a zombie debt to such an extent that she ended up seeing a psychiatrist for depression. An NCO Financial Systems agent called her many times during the day and even night. He left messages on the voice mail box if his calls were not attended to. He called neighbors and disclosed details about her debt. He threatened to sue her, seize her vehicle and have her arrested.
NCO Financial Systems agent is a third party collector and not an ‘in house’ collector. NCO Financial Systems violated the FDCPA and can be sued by the consumer in the above case. NCO Financial Systems has countless rip off reports against it. It is considered to be the worst debt collection agency which creates zombie debts.
The FTC watches over the collection industry with eagle eyes but with so many collection agencies mushrooming in the market, the FTC acts if there are a substantial number of complaints about a particular agency.
In 2004, the FTC penalized NCO with 1.5 million dollars fine for reporting inaccurate information to the credit bureaus. Reporting wrong information to the credit bureaus is one of the violations of the FDCPA. Despite a regular array of complaints about it, NCO Financial Systems continues to violate the FDCPA.
Article Source
REMEMBER: Cell Phone Numbers Go Public this month.
REMINDER: all cell phone numbers are being released to telemarketing companies and you will start to receive sales calls.
…. YOU WILL BE CHARGED FOR THESE CALLS
To prevent this, call the following number from your cell phone: 888-382-1222.
It is the National DO NOT CALL list. It will only take a minute of your time. It blocks your number for five (5) years. You must call from the cell phone number you want to have blocked. You cannot call from a different phone number.
HELP OTHERS BY PASSING THIS ON .. It takes about 20 seconds.
FTC LINK: http://www.ftc.gov/donotcall
