DONT VIOL8 FDCPA. K? THX

If we were sending a text about the FTC’s case against Glendale, California, based debt collector National Attorney Collection Services, that might be all we could convey, given space limitations.  That abbreviated headline illustrates just one of the technological challenges posed when using new means of communication.  But regardless of the method debt collectors choose when contacting people who owe money, the consumer protections of the Fair Debt Collection Practices Act still apply.  That’s just one point members of the industry should take from the FTC’s $1 million settlement with National Attorney Collection Services.

First off, the FTC says the company — which also called itself National Attorney Services, National Attorneys, Abogados Nacionales, etc. — claimed it was a law firm, that their collectors were attorneys or legal assistants who worked closely with attorneys, that texts to people’s mobile phones were sent on behalf of attorneys, that they’d sue people unless they made prompt payment, and that not paying up would result in garnishment.  But according to the FTC, those statements were false, false, false, false, and false, in violation of Section 5 and the FDCPA.

The FTC’s complaint also alleges the company used text messages in a way that violated the law.  For example, the company sent people texts that read:

[LAST NAME], [FIRST NAME], It is URGENT for you to call National Attorney Service regarding a very sensitive matter. [PHONE NUMBER WITH EXTENSION] Case# [CASE NUMBER]

(Other versions included some of the same wording in Spanish.)

When the text was the first contact with the debtor, the FTC says the defendants didn’t honor the FDCPA’s requirement that they disclose they’re debt collectors and that any information will be used to collect debts.  When the text message was a follow-up communication, the defendants still didn’t disclose they were debt collectors — an FDCPA violation, too.  According to the complaint, the defendants also flouted the law’s requirement that they provide a written communication within 5 days of their initial contact with a debtor that spells out the amount of the debt, the name of the creditor, and information about the consumer’s right to dispute the debt.

When people asked for their corporate address, the defendants clammed up.  Why is that relevant?  Because without a mailing address, people couldn’t exercise their right to dispute the debt in writing or send the defendants a cease-and-desist letter demanding to be left alone.  That’s why the FDCPA says collectors have to give that information if they’re asked.

That wasn't the FTC’s only beef with the defendants’ communications.  Apart from one narrow exception for the purpose of locating a debtor, it’s illegal to contact someone other than the person who owes money.  But the FTC says the defendants send those same texts to family, friends, and sometimes even strangers.  According to the complaint, the defendants also called family, friends, and co-workers and told them the person owed money.  In other cases, family and friends who received the texts called the number and got an illegal earful from the defendants about what the person owed.

Even when the defendants contacted people by mail, the FTC says the envelope illegally disclosed that the letter was about a debt.  For example, the return address, National Attorney Collection Services, Inc., made that apparent to someone who saw the envelope.  And just in case that wasn’t obvious enough, some envelopes included a graphic of a beefy arm in a striped suit grabbing a guy by the ankles and hanging him upside-down as cash came out of his pockets.  Subtle?  Not so much.

In addition to imposing a $1 million civil penalty, the stipulated order puts procedures in place to make sure the defendants clean up their debt collection act from here on in.  For example, the defendants are barred from using the business names National Attorney Service, National Attorney, or National Attorney Collection Service, or similar variations in communications with consumers.  The same goes for words like attorney, law, legal, etc., that suggest the defendants are law firms or collect debts on behalf of lawyers.

What’s more, for the next 5 years, the defendants’ written collection communications (except text messages to mobile phones) must include this information clearly and conspicuously on each written collection communication sent to a debtor:

Federal and state law prohibits certain methods of debt collection and requires that we treat you fairly. You can stop us from contacting you by writing us a letter that tells us to stop the contact. Sending such a letter does not make the debt go away if you owe it. Once we receive your letter, we may not contact you again, except to let you know that there will not be any more contact or that we intend to take a specific action.

If you have a complaint about the way we are collecting this debt, please write to our CONTACT CENTER, [current physical address], email us at [current email address], or call us toll-free at [current phone number] between 9:00 A.M. Pacific Time and 5:00 P.M. Pacific Time Monday- Friday.

The Federal Trade Commission enforces the Fair Debt Collection Practices Act (FDCPA). If you have a complaint about the way we are collecting your debt, please contact the FTC online at www.ftc.gov; by phone at 1-877-FTC-HELP; or by mail at 600 Pennsylvania Ave., NW, Washington, DC 20580.

What’s the message for debt collectors?  The FDCPA offers clear dos and don’ts about communicating with people who owe money.  Regardless of the means you choose — mail, phone, text, or something else — the law applies across the board.  Having trouble meeting the statute’s requirements in a particular medium?  Then think twice about using it for that purpose.  Furthermore, if a person owes money, that information shouldn’t go beyond the two of you.  Disclosing information to family, friends, or colleagues crosses the FDCPA line.

The FTC’s settlement with National Attorney Collection Services offers a timely opportunity to review your own corporate communications.  Looking for more compliance guidance?  Bookmark the BCP Business Center’s debt collection page.