August 7, 2014 | dan Debt Collectors in Memphis and New York State Settle with FTC Concerning Multiple Federal Law Violations Two Operations to Pay Total of Two Million Dollars in Civil Penalties A Memphis-based debt collector has agreed to stop deceiving and harassing consumers and otherwise violating federal debt collection laws, and will pay a $1.5 million civil penalty to settle Federal Trade Commission charges, while a debt collection operation headquartered outside New York City will pay $490,000as a penalty to settle a separate FTC complaint. “The FTC is committed to protecting consumers from all types of deceptive and harassing debt collection tactics,” said Jessica Rich, Director of the Commission’s Bureau of Consumer Protection. Regional Adjustment Bureau In its complaint against Regional Adjustment Bureau, the FTC charges that the Memphis-based company used unfair and deceptive collection tactics, such as repeatedly calling consumers and accusing them of owing debts that they did not owe, contacting consumers at work while knowing that their employers did not allow the calls, making unauthorized withdrawals from consumers’ bank accounts, and disclosing confidential information about debtors to third parties. The company collects on about a million consumer accounts a year and is charged with violating the FTC Act and the Fair Debt Collection Practices Act (FDCPA). Under the proposed order settling the FTC’s charges Regional Adjustment Bureau is permanently prohibited from engaging in false, deceptive, unfair, and harassing debt collection practices. The order requires the company to address specific problematic conduct alleged in the Commission’s complaint — whenever a consumer disputes the validity or the amount of a debt, Regional Adjustment Bureau must either close the account and end its collection efforts, or suspend collection, until it has conducted a reasonable investigation and verified that the information about the debt is accurate and complete. The order also restricts situations in which the company can leave voicemails that disclose the alleged debtor’s name and the fact that he or she may owe a debt. The Commission is grateful for the critical assistance provided by the Tennessee State Attorney General’s Office during the course of its investigation of this matter. Credit Smart, LLC In the second case announced today, the complaint, which names Suffolk County-based Credit Smart, LLC and several associated companies and individuals, charges that Credit Smart used unfair and deceptive tactics, such as leaving pre-recorded messages for consumers that pretended to offer financial relief. The messages provided a number to call, and promised to provide information about a “Tax Season Relief Program,” a “stimulus relief package,” or a “balance transfer program.” In reality, there was no financial relief plan, and the messages were merely a ruse to get consumers on the line with debt collectors, according to the FTC. The complaint also alleges that when collectors spoke to consumers, they would falsely threaten to sue them, which they had no plans to do; garnish their wages, which they could not do without a court order; or arrest them, which they had no legal right to do. The defendants also allegedly threatened to collect on old debts that were beyond the statute of limitations, refused to provide information about the debt that consumers were legally entitled to request, continued to attempt to collect on debts without a reasonable basis for telling consumers they owed the debt, told consumers they owed interest on debts when they didn’t, and revealed the debt to consumers’ relatives, employers, and coworkers. The FTC charges that Credit Smart’s tactics violated the FTC Act and the FDCPA. Under the proposed order settling the FTC’s charges, the defendants must halt their illegal debt collection tactics, including making false threats to sue and arrest consumers and garnish their wages, pretending to be financial counselors, falsely insisting that consumers owed large amounts of interest, and otherwise violating the federal debt collection law. They also must provide consumers with a disclosure that explains their rights regarding the collection of time-barred debt, and another explaining how to file a complaint with the FTC if they feel they are being treated unfairly. The order also imposes a $1.2 million civil penalty. Due to the defendants’ inability to pay, however, all but $490,000 of the penalty is suspended.