On November 4, 2015, the Federal Trade Commission (FTC) announced a new enforcement initiative targeting debt collection companies. The initiative, which is known as “Operation Collection Protection,” involves partnerships with state authorities to investigate debt collectors and prosecute civil and criminal enforcement actions against debt collection companies engaged in illegal collection tactics. The FTC stated that it has prosecuted, with the assistance of over 70 state and federal agencies, approximately 115 total actions this year. The FTC noted that many of the enforcement actions involved alleged harassing phone calls, improper threats of lawsuits, and threats of wage garnishment. Other actions involved attempts to collect debts that consumers did not owe and failures to make required disclosures or provide required notices.
In connection with the announced initiative, the FTC announced five new enforcement actions:
- A civil enforcement action against a regional debt collection company specializing in collection of delinquent or charged off credit card accounts. The company bought charged off or past due accounts from primary creditors and attempted to collect the debts using alleged improper tactics. According to the FTC, the company threatened consumers with litigation, wage garnishment, and arrest/imprisonment. The company also allegedly impersonated attorneys and process servers, continued making harassing telephone calls despite consumers requests that they stop calling, and failed to make required disclosures. On October 21, 2015, the United States District Court for the Central District of California issued a temporary restraining order ordering the company to temporarily cease all operations.
- A civil enforcement action against a regional debt collection company that attempted to collect debts on fictitious accounts. According to the FTC, the company knew that certain debts were invalid because the primary lenders requested that the company cease collection efforts on the accounts, but the company ignored the requests and continued its collection efforts. The company also allegedly ignored consumers who presented evidence that they never owed the relevant debt. The company also allegedly failed to properly identify themselves during debt collection calls, impersonated attorneys or other court officers, and threatened arrest and litigation. On October 6, 2015, the United States District Court for the Western District of New York issued a temporary restraining order requiring the company to temporarily cease all operations.
- A civil enforcement action against a married couple that allegedly attempted to collect fictitious debts and engaged in harassing and abusive collection practices. The couple allegedly created a variety of business entities to facilitate their collection efforts. The couple allegedly threatened consumers with wage garnishment, suspension of driving licenses, and arrest or imprisonment. On November 3, 2015, the parties filed a stipulated final judgment and order, which imposes a $6 million monetary penalty. The proceeds of the judgment will be used to reimburse affected consumers. The judgment, which still requires court approval, also prohibits the couple from working in the debt collection industry for life.
- A civil enforcement action against a regional debt collection company that allegedly engaged in threatening and abusive debt collection practices. According to the FTC, this company allegedly informed consumers that they had committed check fraud or other criminal acts related to their debt accounts. The company allegedly threatened to sue consumers, have them arrested and imprisoned, garnish wages, and contact employers. The company also allegedly attempted to collect fictitious debts that consumers did now owe. On October 16, 2015 the parties filed a stipulation to enter into a final order for permanent injunction and settlement, which bars the company and its principals from the debt collection industry for life and imposes an $8 million judgment. The stipulated order still requires court approval.
- A civil enforcement action that was filed under seal.