FTC Continues To Target Consumer Harrassment by Debt Collectors

The Federal Trade Commission said today that consumers who have received debt-collection letters from Goldman & Levine, the name under which the Secaucus, New Jersey-based G&L Financial Services, Inc. does business, should know that the firm has agreed to settle charges over the alleged harassment of individuals from whom it was attempting to collect monies. The FTC accused G&L of using a variety of prohibited tactics intended to harass and intimidate consumers -- including telling others about consumers’ debts, using obscene language, and using Goldman & Levine letterhead depicting the scales of justice and other means to falsely imply that collection letters were being sent by attorneys or legal action was about to be taken. These are violations of the Fair Debt Collection Practices Act (FDCPA) and, under the settlement in this case, G&L would pay a $10,000 civil penalty and conduct future business under the promise that it will not violate the statute.

This is the tenth case brought by the FTC in recent years targeting debt collectors who violate the FDCPA, which prohibits harassing, abusing or otherwise intimidating consumers. Jodie Bernstein, Director of the FTC’s Bureau of Consumer Protection, said that one of her main concerns in these cases is that some consumers will pay debts they don’t owe just to stop the harassment. “By law, no consumer -- whether they owe a debt or not -- has to suffer abusive, oppressive or threatening behavior by a third-party debt collector,” Bernstein said. “Indeed, the orders we obtain in these cases ensure that future customers contacted by debt collection companies get the message very clearly that they can stop, dead in its tracks, any communication at all with the debt collector. If the consumer really owes the debt, that won’t change. But they should know that the law also gives consumers the right to strike back, by suing debt collectors who continue to harass them.”?

The FDCPA generally requires that debt collectors treat consumers fairly in attempting to collect personal, family and household debts for third parties. According to the FTC complaint detailing the charges in the G&L case, on numerous occasions when attempting to get the addresses of consumers from whom it was attempting to collect alleged debts, G&L told third parties about the consumers’ debts, a violation of FDCPA. G&L also talked with third parties for other reasons without the permission of the consumers, used obscene language when talking to the consumers, falsely implied that letters or other communications were from an attorney, and falsely represented that, if consumers did not pay the debts, they could be arrested or imprisoned, or their wages could be garnished or their property attached. The FDCPA prohibits debt collectors from threatening actions that they either cannot or do not intend to take.

G&L has signed a proposed consent decree to settle these charges, and it requires the court’s approval to become binding. Under the consent decree, G&L would pay the $10,000 civil penalty within five days of court entry, and would be prohibited from violating the FDCPA in the future. In addition, the consent decree would prohibit G&L for 10 years from using the scales of justice illustration in any debt-collection related communication with a consumer. Finally, the consent decree would require the firm to notify all future customers in the initial collection letter of their right to ask G&L in writing to stop contacting them, and to notify all employees of the FDCPA’s requirements and their individual liability for violations.

The proposed consent decree was filed in U.S. District Court for the District of New Jersey, in Newark, yesterday, by the Department of Justice at the request of the FTC. The Commission vote in this matter was 5-0. The case was investigated by the FTC’s New York Regional Office.

NOTE: This consent decree is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent decrees have the force of law when signed by the judge.

The FTC has developed a free brochure for consumers explaining particular debt-collection practices that are banned under the FDCPA, and offering other helpful information. Copies of the brochure, complaint and proposed consent decree are available from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC’s World Wide Web site at: http://www.ftc.gov

(FTC File No. 142 3060)

(Civil Action No. D96-2178)