When all is said and dun: Record-setting penalty for debt collection violations

"You’ve reached the FTC.  Sorry we’re not able to take your call right now.  But if you’re Expert Global Solutions — the biggest debt collection operation in the world — please pay a $3.2 million civil penalty, the largest ever from a third-party debt collector, and start honoring the terms of the Fair Debt Collection Practices Act.  Oh, and at the sound of the tone, please don’t leave a voicemail illegally disclosing that a person owes money."  BEEP.

No, that’s not what callers hear when we step away from the desk, but the FTC’s record-setting settlement with Expert Global Solutions and its subsidiaries should send a message to the debt collection industry nonetheless. 

(By way of background, you may know the defendants as NCO Financial Systems.  Other Expert Global Solutions subsidiaries include ALW Sourcing and Transworld Systems, which also does business as North Shore Agency.  It's a big group of companies, with more than 32,000 employees operating in the US, Canada, Barbados, India, the Philippines, and Panama.)

According to the FTC’s complaint, the defendants called consumers multiple times in the same day, often for weeks on end and early in the morning or late at night — times the FDCPA expressly declares off limits.  In addition, the FTC says they called people at work even when they knew employers didn’t allow those calls.  And the calls kept coming, even after people asked them to stop and the defendants promised to cut it out.

The complaint also alleges that the defendants left phone messages that disclosed the existence of a person’s debt to a third party, in violation of the FDCPA.  For example, even when the greeting made clear the phone belonged to someone other than the debtor or if it was a generic greeting that could belong to just about anyone (“You’ve reached 555-5555.  Please leave a message.”), the FTC says the defendants went ahead and left voicemails disclosed they were debt collectors trying to collect money from a particular person.

To make matters worse, the FTC alleges that the even when consumers explained that they didn’t owe the debt the defendants were trying to collect, the defendants wouldn’t take no for an answer.  They continued their collection efforts without verifying the accuracy of the disputed information.

The FTC’s lawsuit alleges eight separate courses of conduct that violated the FDCPA or Section 5 of the FTC Act.  Under the terms of the settlement, Expert Global Solutions, NCO, and other subsidiaries are under a legal obligation to change their tactics.  In addition to the $3.2 million civil penalty, the defendants have agreed to cut out the harassment, including the incessant calls; stop calling a person’s workplace if it’s clearly inconvenient or not allowed by the employer; and — except for limited circumstances allowed by law — stop all communications if a person has requested no further contact or if they’ve refused to pay the debt.

The settlement also restricts the situations when the defendants can leave voicemails that disclose the name of a purported debtor and that he or she owes money.  (You’ll want to read the order for details on how that will work.)

What about when people dispute that they owe the debt or how much they owe?  The defendants have two choices:  1) close the account; or 2) suspend collections until they have conducted a reasonable investigation and verified that their information about the debt is accurate and complete.

The settlement includes an important provision to encourage compliance.  For the next year, the defendants must record at least 75% of their debt collection calls and keep the recordings for at least 90 days.

The message to others in the industry:

1. Honor the restrictions spelled out in the Fair Debt Collection Practices Act about how and when you can contact people who owe money.
    
2. Aside from the procedure allowed by the narrow location information exception in the FDCPA, don’t tell others about a person’s debts.
    
3. Don’t use false, deceptive, or misleading tactics to collect debts.
    
4. Don’t communicate with a debtor who notifies you in writing they don’t want to hear from you again.  The law recognizes a few limited exceptions — for example, you can contact the person to let them know that you plan to invoke certain legal remedies or that you’ve decided not to take additional steps to collect the debt — but aside from that, don’t contact them again.
    
5. Pay attention when people tell you they’ve paid the debt, they don’t owe the debt, or that you don’t have the right person.

Bookmark the Business Center's Debt Collection page for easy access to compliance resources.