Monday, January 30, 2012

FYI: FTC Reaches $2.5MM Settlement w/ National Debt Buyer On Credit Reporting, "Time-Barred" Debts, and Other Collection Issues

The Federal Trade Commission announced that it reached a $2.5MM settlement with one of the nation's largest consumer debt buyers, relating to various allegations of misrepresentation and supposed deceptive conduct especially as to old or "time-barred" debts, as well as alleged failures to conduct reasonable investigations following notice of disputes received from credit reporting agencies. 
In addition, the company agreed to notify debtors as to "time-barred" debts that the company will not sue to collect on the debt, and agreed not to sue on those debts even if the debtor makes a partial payment that otherwise would make the debt no longer time-barred.

The company also agreed that, when consumers dispute the accuracy of a debt, it will investigate the dispute, ensuring that it has a reasonable basis for its claims the consumer owes the debt, before continuing its collection efforts.  The settlement would also bar the company from reporting the debt to credit reporting agencies without notifying the consumer about the negative report.
Copies of the proposed consent decree, complaint and related materials are available at:
The FTC's action alleges violations of the FTC Act, the Fair Debt Collection Practices Act, and the Fair Credit Reporting Act.The U.S. Department of Justice filed the proposed consent order this week at the FTC's request. 
Specifically, the FTC's nine-count complaint charged the company with:

-  Allegedly misrepresenting that consumers owed a debt when it could not substantiate its representations; 
-  Allegedly failing to disclose that debts are too old to be legally enforceable or that a partial payment would extend the time a debt could be legally enforceable; 
-  Allegedly providing information to credit reporting agencies, while knowing or having reasonable cause to believe that the information was inaccurate; 
-  Allegedly failing to notify consumers in writing that it provided negative information to a credit reporting agency; 
-  Allegedly failing to conduct a reasonable investigation when it received a notice of dispute from a credit reporting agency; 
-  Allegedly repeatedly calling third parties who do not owe a debt; 
-  Allegedly improperly informing third parties about a debt; 
-  Allegedly misrepresenting the character, amount, or legal status of a debt; providing inaccurate information to credit reporting agencies; and making false representations to collect a debt;
-  Allegedly failing to provide verification of the debt; and
-  Allegedly continuing to attempt to collect a debt after it is disputed by the consumer.

The FTC also issued a new publication for consumers, "Time-Barred Debts: Understanding Your Rights When It Comes to Old Debts," which is available at:

Ralph T. Wutscher
McGinnis Tessitore Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874

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