For the first time, the Federal Trade Commission has taken action against a debt collector for unlawfully using text messaging.
A Glendale, California-based debt collector will pay $1 million dollars to settle FTC charges that it violated both the Fair Debt Collection Practices Act and the FTC Act, the U.S. agency said Wednesday.
The FTC alleges that Archie Donovan and two companies he controls – National Attorney Collection Services and National Attorney Services – used English- and Spanish-language text messages and phone calls in which they unlawfully failed to disclose that they were debt collectors.
In their text messages, phone calls, and mailings, the debt collectors also falsely portrayed themselves as law firms – by using the names National Attorney Services, National Attorney Service, National Attorney, and Abogados Nacionales, the FTC 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. “The FTC has a zero tolerance policy for deception.”
The debt collectors also falsely threatened to sue consumers for not paying their debts or to garnish their wages.
The FTC posted an image of an envelope allegedly used by the debt collectors to contact consumers’ family members, friends and co-workers about their debts. The envelope shows a large arm shaking money from a consumer who is strung upside down. Federal law does not allow debt collectors to disclose publicly someone’s private debt.
Mailing envelopes can include only the name and address of the company, and cannot indicate that the consumer may owe a debt.
The FTC also alleged that Donovan and his companies illegally revealed debts to the consumers’ family members, friends and co-workers.
In addition to the $1 million civil penalty, the settlement requires the defendants to stop sending text messages that do not include the disclosures required by law, and to obtain a consumer’s express consent before contacting them by text message. The defendants also are barred from falsely claiming to be law firms, and from falsely threatening to sue or take any action – such as seizure of property or garnishment – that they do not actually intend to take.
The FTC held a workshop in 2011 and issued a report in 2009 that addressed how debt collectors can use text messages to collect debts in a lawful manner while maintaining consumers’ privacy.
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