News & Resources

Court rules in favor of FTC against debt collection agency

Oct 05, 2011 Mike Garretson

As part of a wider effort to crack down on abusive, unethical or illegitimate debt collection practices, the Federal Trade Commission successfully put a halt to an operation in California that has been accused of such tactics. A U.S. district court ruled in favor of the FTC's complaint, agreeing that the organization's practices were abusive and deceptive to its small business clients. Among the concerns, the FTC claimed the agency improperly revealed debts to third parties, falsely threatened consumers with lawsuits or arrests and falsely claimed consumers would be liable for legal fees. "The defendants allegedly collected money from consumers on a client’s behalf and then kept more than they were entitled to, sometimes keeping all the money for themselves, instead of forwarding what was owed to the client," reports. As debt collection activity has picked up in recent years in response to the mounting economic and financial woes, federal agencies have been pressured to ramp up regulatory and oversight practices to curb improper collection tactics.