Operation Collection Protection puts the heat on illegal debt collection tactics

For debt collectors who resort to illegal tactics, it must feel like 110 in the shade because 115 law enforcement actions announced this year by the FTC and local, state, federal, and international partners – including 30 just-filed cases – have turned up the heat on law violators. From Buffalo to San Diego and dozens of jurisdictions in between, companies that flout debt collection standards are feeling the burn.

Operation Collection Protection sends the unmistakable message that law enforcers have locked arms in the fight against debt collection gone bad. Coordinated actions by the FTC, Department of Justice, CFPB, 47 state AGs, 17 state regulators, local authorities, and one Canadian agency target a broad range of illegal conduct – abusive collection calls, bogus threats of arrest or lawsuit, deceptive debt buying practices, phantom debt scams, and violations of pretty much every provision of the Fair Debt Collection Practices Act.

The defendants, too, represent the breadth of the industry. Some actions target egregious practices by rogue individuals. Others in the hot seat include some of the biggest names in the business whose illegal conduct affected thousands of consumers. Remedies include asset freezes, injunctions, and millions in redress and civil penalties.

What can companies take from Operation Collection Protection?

1. Illegal debt collection practices are sitting smack in the center of the FTC’s radar screen.  New cases filed by the FTC include actions against Delaware Solutions, BAM Financial, and a third lawsuit still under seal. We also announced settlements in pending actions against National Check Registry, LLC, and K.I.P., LLC. (We’ll dive into the details of those cases in future posts, including more about our partnerships with the New York AG in Delaware Solutions and the Illinois AG in K.I.P.) Add it all up and since 2010, the FTC has sued more than 250 debt collectors and secured judgments of almost $350 million. 86 companies and individuals have found themselves 86ed from the industry – outright banned from ever collecting debts again.
2. The stakes just got higher: Violations can result in prison time.  Illegal debt collection practices don’t just risk the wrath of civil enforcers and regulatory agencies. They can land collectors behind bars, too. As part of Operation Collection Protection, 19 individuals face indictment, have pleaded guilty, or have been convicted of criminal charges. One scammer was sentenced to more than 17 years in prison for actions stemming from a phantom debt collection operation that targeted Spanish-speaking consumers. A federal judge in Miami handed down a 13-year sentence against a related defendant.
3. Enforcement partners have created a united front against debt collection abuses.  Why this historic Operation Collection Protection partnership? In 2014, consumers filed more than 280,000 complaints with federal agencies related to debt collection, earning the industry the unenviable chant of “We’re #1.” When law enforcers join forces, we can work more effectively to help protect the 35% of Americans with credit records who have past-due debts on their reports. And today is just the beginning of this partnership.
4. Industry members have a role to play, too.  There’s another partner whose cooperation is key in rooting out illegal practices and encouraging compliance. The FTC has reached out to members of the debt collection industry to work collaboratively to stop questionable practices before they start. Our Debt Collection Dialogues in Buffalo and Dallas focused on that topic and we’ll continue the conversation at our November 18th Dialogue in Atlanta.

Coming soon:  Lessons to learn from the FTC’s Operation Collection Protection cases