Wednesday, March 24, 2010

FYI: FTC Announces $1M+ Settlement w/ Debt Collector Involving Alleged Failure to Report Debts as Disputed

The Federal Trade Commission announced that a nationwide debt collector has agreed to pay a civil fine of more than $1 million to settle charges that it failed to report debts as disputed, and pressed consumers to pay debts they often did not owe.  Copies of the complaint and consent decree are attached.

According to the FTC's complaint, the company and two of its officers illegally tried to collect invalid debts and reported them to the credit reporting agencies without noting that consumers disputed them.  In addition, the FTC alleged that even after receiving information from consumers that a debt was paid off or did not belong to the consumer, the company continued to assert without a reasonable basis that the consumer owed the debt, without trying to confirm or dispute the consumer's information, in violation of the FTC Act.

The FTC charged that the company, Credit Bureau Collection Services, and two of its officers, Larry Ebert and Brian Striker, violated the FTC Act and the Fair Debt Collection Practices Act.  The company also is charged with violating the Fair Credit Reporting Act by reporting information to credit agencies that consumers had proved was inaccurate, failing to inform the credit agencies that consumers had disputed the debts, and failing to investigate after receiving a notice of dispute from a credit reporting agency.

In addition to imposing the $1.1 million civil penalty on the company, the settlement order:

Bars them from making claims that a debt is owed or about the amount, without a reasonable basis;

Requires the defendants, when a debt is questionable or a consumer questions it, to either close the account and end collection efforts or investigate the dispute. If they cannot show that the consumer owes a debt, they cannot sell the debt or provide it to any business other than the original client;

Bars the defendants from further violations;

Prohibits them from making unsupported statements to collect a debt or obtain information about a consumer; and

Bars the company from re-reporting information to credit reporting agencies that it had voluntarily deleted from credit reporting before December 2008.


Let me know if you have any questions.  Thanks.


Ralph T. Wutscher

Kahrl Wutscher LLP

The Loop Center Building

105 W. Madison Street, Suite 2100
Chicago, Illinois  60602
Direct:  (312) 551-9320 

Fax:  (866) 581-9302
Mobile:  (312) 493-0874


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