FTC and State AGs Announce Four Actions Against Debt Collectors as Part of Operations Collection Protection


FTCOn January 7, 2016, the Federal Trade Commission (“FTC”) and its law enforcement partners announced four separate actions against various debt collectors.  The FTC stated that the actions were part of a continuing nationwide crackdown referred to as “Operation Collection Protection,” which is designed to target debt collectors using illegal tactics.  The FTC claims the debt collectors’ tactics include harassing phone calls, false threats of lawsuits and arrest, attempts to collect false debts, failure to provide consumers with required disclosures, and noncompliance with state licensing agreements.  According to the FTC, these four cases increase the number of actions taken as part of Operation Collection Protection to 130 over the past year by over 70 law enforcement partners.

In the first action, the FTC announced that the United States District Court for the Northern District of Georgia had issued a stipulated preliminary injunction against several national debt collectors.  The debt collectors allegedly called consumers and demanded the payment of payday loans and other debt despite the fact that the consumers disputed the debt.  The debt collectors also allegedly impersonated investigators and law enforcement agents and threatened to arrest or sue the consumers if they failed to pay their debt.  The defendants also allegedly called and contacted relatives, friends of the consumers, and co-workers about the debt, causing an alleged $4 million in consumer injury.  The defendants agreed to the binding preliminary injunction pending litigation, which prohibits the defendants from using any illegal collection tactics described in the FTC’s complaint​, and barring the defendants from violation the Fair Debt Collection Practices Act (“FDCPA”).

In the second action, the FTC announced that it had agreed to a stipulated order for permanent injunction with several debt collection companies who also allegedly​ impersonated law enforcement officials or process servicers, threatened consumers for nonpayment, threatened lawsuits and wage garnishment, and withheld information from consumers required to dispute or confirm their debts.  The order imposes a judgments of $2,229,756 and bans the defendant from debt collection activities.  The order was filed in the United States District Court for the Western District of New York, and is awaiting approval by the district judge.

In the third action, the FTC announced that a debt services company and its owner agreed to settle charges that the defendants violated the FTC Act.  The FTC alleged that the defendants sent postcards and letters to consumers falsely indicating that they came from courts.  Defendants also allegedly threatened consumers with arrest, vehicle impoundment, and the inability to renew their drivers’ licenses, and failed to inform consumers of information required by the FDCPA.  The proposed stipulated order for permanent injunction prohibits defendants from misrepresenting material facts when collecting debts and imposes a $194,888 judgment.  The order was filed in the United States District Court for the Northern District of Texas, and is awaiting approval by the district judge.

In the fourth action, the FTC announced that it obtained a permanent injunction against the final defendant in its case against a debt collection company.  The FTC previously​y received a summary judgment order banning an individual defendant from debt collection activities and ordering him to pay $565,000 for use of deception and threats to collect on phantom payday loans that the consumers did not owe.  The FTC also previously recovered​ from an individual defendant and the company banning them from debt collection and ordering them to pay $3.9 million in penalties.