Debt to rights

Record-breaking refund programs are usually cause for celebration. But the FTC’s largest-ever debt collection redress case offers sobering insights into the lengths some companies will go to illegally squeeze the last dime out of people already in financial distress.

California-based Asset & Capital Management Group was a third-party debt collector that bought portfolios of past-due credit card debt. Using a labyrinth of intertwined companies, the defendants subjected consumers to a relentless campaign of harassment and intimidation. Their M.O. included a host of debt collection don’ts. They illegally called family, friends, and co-workers about people’s debts. They impersonated process servers or law firm employees. And they falsely threatened people with arrest, wage garnishment, or seizure of property.

The stipulated final order shut the outfit down and ordered the return of $4 million to consumers who were strong-armed. The FTC just sent checks to close to 95,000 people who lost money to the defendants.

What can other debt collectors take from the case?

Tell the truth or face the consequences. The Fair Debt Collection Practices Act bans any “false, deceptive, or misleading representation or means in connection with the collection of any debt.” Period. Therefore, false or misleading threats of arrest, legal action, garnishment, etc., violate the FDCPA and Section 5 of the FTC Act.  Furthermore, it’s illegal for debt collectors to impersonate process servers, attorneys, or others associated with the judicial system. Identify yourself up front and save the masquerade for Halloween – although if you’re planning to go as a process server or attorney, you really need a better costume.

Structural shenanigans won’t deter law enforcers. When the defendants suspected the legal heat was on, they changed their business identity like others change their socks – in this case, using an assortment of interchangeable three-letter names. It’s an unwise strategy. The FTC won’t let corporate crossword puzzles stand in the way of enforcement.

That “Inc.” doesn’t render you legally inc.-vincible. The judgments in the case held corporate officers, directors, and managers personally liable for violations of the law. When debt collectors find their companies at the wrong end of FTC v., it’s a mistake to assume that the corporate entity will take the hit while the principals sashay away. What’s more, the orders in this case include provisions banning them from debt collection. For how long? For life.

We’re in it for the long haul.  Even after a judgment becomes final, the FTC is still on the case. First, when consumers will be getting money back, there’s the pain-staking effort of recovering assets, identifying victims, and getting refunds into the right hands. Furthermore, FTC staffers remain vigilant to make sure those court-ordered bans are enforced. For how long? For life.