Debt Collection News - Debt Collection Supervisors Settle FTC Charges
The Federal Trade Commission administer a wide variety of consumer protection laws, engages in law enforcement, and develops policy and research tools to prohibit unfair and deceptive acts or practices against consumers including actions that involve credit reporting agencies, credit repair services and debt collection activities.
The FTC produces press releases on action taken against businesses and individuals that fall under the jurisdiction of the FTC.
This is a recent press release on action taken by the FTC regarding unfair and deceptive practices regarding debt collections.
Concluding a case that drew the largest civil penalty ever imposed on a debt collection business, the Federal Trade Commission settled with the two remaining individual defendants who allegedly misled, threatened, and harassed consumers; disclosed their debts to third parties; and deposited postdated checks early, in violation of federal law. The settlement order requires each of these senior managers to pay a civil penalty and bars them from future violations.
“The FTC wants to remind debt collectors of their responsibilities and obligations under the law. Abusive collection actions are illegal, and if debt collectors use abusive tactics they could face legal action,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection. “At the same time, we want consumers to understand their rights if their debts go into collection. Money matters, and the more people know about managing their debt and dealing with debt collectors, the better off they will be.”
According to the FTC’s complaint, filed by the Department of Justice on the FTC’s behalf, the defendants participated in, or controlled, the actions of debt collectors whose unlawful practices included false or deceptive threats of garnishment, arrest, and legal action; improper calls to consumers; frequent, harassing, threatening, and abusive calls; and unfair and unauthorized withdrawals from consumers’ bank accounts. The complaint also alleged that the defendants failed to adequately investigate consumer complaints or discipline collectors, and collectors who were terminated for violating the Fair Debt Collection Practices Act (FDCPA) often were rehired within a few months.
In 2008, Academy Collection Service, Inc. and its owner, Keith Dickstein, paid $2.25 million to settle FTC charges that Academy collectors violated the FTC Act and the FDCPA while collecting debts, and that Dickstein failed to stop the violations. The settlement order announced today, negotiated by DOJ and the FTC, imposed civil penalties of $375,000 and $300,000, respectively, on Albert S. Bastian and Edward Hurt, who oversaw Academy’s Las Vegas collection center. The judgments were suspended upon payment of $7,500 each, based on their ability to pay. The full judgments will become due immediately if the defendants are found to have misrepresented their financial condition.
The order bars Bastian and Hurt from making false, deceptive, or misleading representations in debt collection efforts, such as that nonpayment will result in garnishment of wages, seizure of property, or lawsuits, or that they or their agents are attorneys. They also are prohibited from withdrawing money from consumers’ bank accounts without their express informed consent, and from depositing or threatening to deposit postdated checks before the date on the check. In addition, the pair are barred from improperly communicating with third parties about a debt; communicating with a consumer at any unusual time or place; and harassing, oppressing, or abusing any person in connection with debt collection.
The Commission vote to authorize DOJ to file the consent decree was 4-0. The consent decree was entered in the U.S. District Court for the District of Nevada. This consent decree is for settlement purposes only and does not constitute an admission by these defendants of a law violation. A consent decree is subject to court approval and has the force of law when signed by a judge.
Get Out of Debt, a Starting Point
Debt is in every household. Too much debt can be paralyzing and you may be in over your head and not even fully realize it. If you suspect that you’re carrying too much debt in the form of credit cards, mortgages, car loans and other debt instruments, you need to determine your exact position and then, most likely, begin working to free yourself from the weight of the financial burden.
Too Much Debt
It’s expected, and actually a good thing, to have some debt. Your mortgage, for example, is one of your largest tax advantages. But there are few, if any, perks to having a balance on credit cards or other loans. But despite this Americans continue to spend using credit cards. The average American now has over $9,000 in credit card debt and that number’s not getting any lower.
Acceptable debt levels vary by the individual, but a good rule of thumb is looking at percentages. If 20% or more of your take home pay is going to debt that is not of the mortgage variety, you’re looking at too much. Likewise, if more than 30% of your gross income is tied up in your home, you are most likely becoming or already are overextended.
It may be that your numbers are fine, but you still feel finances are tight. If you struggle to make the minimum payments on your debts or can’t even list what you owe on what loan, you’re looking at too much, and it’s time to make a change. Many people who have too much debt don’t think about it. They get their bills in the mail and make the minimum payments or even end up paying late fees on a regular basis without much thought of paying off the whole balance. This is how individuals go deeper into debt and incur more stress.
Making a clear decision to get involved in debt elimination and finding out how to create a plan will actually get people into a position of less debt, better cash flow and less stress. The process will certainly help your credit, credit report and credit scores along the way. Making a plan to get out of debt is the starting point.
Budget
The first step in resolving your debt is to budget correctly each month and monitor the money you have. First, you need to determine what your monthly income or earnings are and what your expenses are. For an entire month, keep track of all spending. Where is your money going? Write down your bills and keep receipts from credit card transactions. Then, at the end of the month, you can collect your items in a single list and tally up the total. If this number is higher than your income, you know you’ve got some work to do.
Write down the names of the different accounts that you have to make payments on, the order they need to be paid, and how much money you need to eliminate that debt. Divide those transactions into essential ones and nonessential. Bills are essential, but some bills such as cable or cell phones may not be. It’s a personal decision. Nonessential items are things such as eating out, entertainment and travel (unless its part of your career.) As you make your budget, you will be able to identify what your spending habits are. The next logical step is to items to remove the nonessential ones. Cut back on eating out and stick to the free coffee in your employer’s break room. Take the bus rather than trying to park downtown and cancel all the premium packages on the cable you never watch anyway. The key here is to eliminate or at least reduce expenses that are lowest in priority. Trim the fat from your spending and design a budget that is reasonable, yet tight.
Paying Down Debt
Once you have your spending under control, stop spending on your credit cards if possible. If you must charge things, use a debit card so that the money comes directly from your bank account or open a new account with a low limit to generate a balance that you will now be paying off monthly. Then tackle the old debt.
The plan for getting the old debt paid off is to focus on one debt at a time. You still make regular payments on all of the debts that you can, but only focus on paying off one at a time. Pay off the loan with the highest rate of interest first. The higher the interest rate on a credit card, the more you pay over time. Pay the minimum on every card except your target. Throw as much as you can toward that card until you have it paid off. In the beginning, cut back on expenses as much as possible to get the first debt paid off. Once the first debt or credit card is paid off, you take the money that you had been applying to that debt and apply it to the next debt that you want to pay off. Then move on to the next card – this one should have the next highest interest rate. Finally, you’ll have all of your debt resolved and you’ll be free to move forward.
The creation of a budget is always a good project so you on work on a path to successful debt management and elimination and then stay on a plan to live a better lifestyle without the need for excess debt.
Using Credit Wisely
Now that you’ve gone through the trouble of paying off your debt, you must work to eliminate the possibly that you’ll end up in the same situation again. Save for anticipated and unanticipated expenses to keep from using your credit cards in emergencies. Find credit cards with a low interest rate should you wind up with a small balance for a month or two. If you do find yourself using your credit card, be as frugal as possible and use it only for items that are long term investments, not incidentals such as travel or meals out.