FTC Announces Settlement with Municipal Debt Collector Over Alleged Abusive Debt Collection Practices

Debt Collection  •  FDCPA  •  FTC

On March 24, 2017, the Federal Trade Commission (FTC) announced​ that it entered into a consent order with a debt collection company, resolving allegations that the company engaged in unfair and abusive debt collection practices in violation of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692-1692p, and section 5 of the Federal Trade Commission Act (FTC Act), 15 U.S.C. § 45.

According to the FTC, the company collected consumer debts on behalf of over 500 municipalities for items such as court fines, parking tickets, and utility bills. In doing so, the company allegedly engaged in a number of unfair and deceptive collection practices:

  1. sending consumers warning letters on municipal government letterhead, suggesting the communications were from a government agency;
  2. falsely claiming consumers would be arrested for nonpayment;
  3. falsely claiming consumers’ driver’s licenses would be suspended for nonpayment; and
  4. falsely claiming the debts would be reported to credit reporting agencies.

Under the consent order​, the company is permanently enjoined from making false representations to collect debts and from committing other violations of the FTC Act or the FDCPA.​ The company also must pay a $350,000 judgment as equitable monetary​ relief. The company did not admit or deny wrongdoing as part of the settlement.

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