Debt Collectors Agree to Pay Up to $3.46 Million to Settle UDAP and FDCPA Claims with FTC

The FTC and a network of debt collection companies, including three of their officers, have agreed to the entry of stipulated orders imposing a judgment of up to $3,462,664 to settle claims that the companies and officers violated the Federal Trade Commission Act and the Fair Debt Collection Practices Act (FDCPA).

In its complaint, the FTC had alleged the defendants engaged in a debt collection business model that was based on falsely claiming to consumers that they had committed a crime and would face lawsuits, wage garnishment, or prison if they did not pay purported debts, which in some instances had already been paid or that the defendants otherwise had no authority to collect.  The FTC claimed these practices to be false, deceptive, and misleading in violation of its UDAP standards and the FDCPA.

Under the terms of the stipulated orders, the defendants are barred from the debt collection business and from buying or selling debt.  The order also imposes a judgment of $3,462,664; however, in a corresponding press release, the FTC notes that the judgment will be partially suspended, due to the defendants’ inability to pay, once the defendants have surrendered certain assets.  The suspension of full payment may be lifted if the court finds the defendants misrepresented or failed to disclose certain aspects of their financial condition.

The FTC’s press release, which contains links to each of the stipulated orders, is available here.