REASONS FOR SETTLEMENT

This statement accompanies the Consent Order executed by defendant National Financial Systems, Inc., in settlement of an action brought to recover penalties and equitable relief from defendant for engaging in acts or practices in violation of the Fair Debt Collection Practices Act, 15 U.S.C.  1692 et seq.

Pursuant to Section 5(m)(3) of the Federal Trade Commission Act, as amended (15 U.S.C. 45(m)(3)), the Commission hereby sets forth its reasons for settlement by entry of a Consent Order and injunction:

On the basis of the allegations contained in the attached Complaint and the financial documents submitted by defendant, which show defendant's inability to pay a larger civil penalty, the Commission believes that the payment of a $20,000 civil penalty by defendant constitutes an appropriate amount on which to base settlement. To protect the integrity of the settlement, which is based on financial disclosures made by defendant, upon proof that defendant materially misrepresented its financial condition, a civil penalty of $100,000 will be imposed, less all prior civil penalty payments made by defendant. The civil penalty should ensure compliance with the law by defendant and others who may be in violation. Further, the provisions enjoining defendant from violating the Fair Debt Collection Practices Act constitute effective means to assure defendant's future compliance with the law. Additionally, with the entry of such a Consent Order, the time and expense of litigation will be avoided.

For the foregoing reasons, the Commission believes that the settlement by entry of the attached Consent Order with National Financial Systems, Inc., is justified and well within the public interest.