Collection Agency Agrees to $1 Million Civil Penalty for Debt Collector Harassment

Glendale, CAHaving to deal with debt collector harassment is bad enough. But when bill collectors stoop so low as to pose as attorneys and threaten harried consumers with lawsuits, not only is it morally wrong, such deception is patently against the law and fodder for a debt collector lawsuit.

As noted in Legal Monitor Worldwide (10/7/13), it is an offense for a debt collector to pose or misrepresent himself as a member of the legal profession with the intent to bullying a consumer into paying a bill. This is especially damning given the current state of debt collections, whereby debts are bought and sold for pennies on the dollar by a host of debt collection agencies that trade debt accounts like bubble gum cards. In the process, information is watered down to the point that consumers are getting harassed for debts they no longer owe or are actually owed by someone else.

One recent debt collector lawsuit brought by the Federal Trade Commission (FTC) concerned the alleged actions of an enterprise doing business as National Attorney Collection Services Inc. According to the report, the principles of the enterprise would go so far as issue text messages to debtors, and send notices in the mail contained in envelopes depicting images of individuals in the throes of being “shaken down.”

It should be noted that the issuance of text messages is not an illegal activity. However, impersonating an attorney in an attempt to persuade, through misrepresentation, a consumer to pay is an offense in the eyes of the law. As for mailings, while it is not illegal to issue a collection notice through the mail, the exterior envelope that contains the notice can only include the addressee and the name of the issuer.

Any additional information or imagery depicted on an envelope that suggests the intended addressee owes a debt of any kind is illegal. Such information could serve to jeopardize a job or reputation. To that end, it is illegal for a debt collector to attempt collections at or through an individual’s place of employment.

And it is certainly against the law to misrepresent yourself as an attorney and threaten to sue or have you arrested, if you don’t pay up.

According to the Los Angeles Times (9/25/13), National Attorney Collection Services Inc. was found to have issued collection notices through the mail contained in envelopes depicting an image akin to the iconic Uncle Sam holding a hapless debtor upside down and shaking him, with dollar bills falling from his pocket. The FTC also accused the debt collection agency, based in Glendale, California, of disclosing, in an inappropriate fashion, alleged debts to friends, family members and coworkers.

In some cases, according to the FTC, debts were tied to payday loans, which have been found to carry predatory interest rates, leaving many consumers in financial distress.

“Defendants have engaged in deceptive and unfair practices in almost every facet of their dealings with these consumers,” the FTC lawsuit said.

“No matter how debt collectors communicate with consumers - by mail, by phone, by text or some other way - they have to follow the law,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection, in comments published in the Los Angeles Times. “The FTC has a zero tolerance policy for deception.”

As a result of the bill collector lawsuit brought by the FTC, the collection agency agreed to pay a civil penalty valued at $1 million. The defendant was also required to secure permission from a debtor before contacting them via text message, and that National Attorney Collection Services Inc. must cease all suggestions or references to being a law firm.

Debt collector harassment practices such as threatening to litigate, or undertake the seizure of property or garnishment of wages must also stop.

The debt collector lawsuit was filed in US District Court in Los Angeles, case No. CV13-06212.