Allied Bond & Collection Agency, Inc. (Allied), has agreed to settle Federal Trade Commission charges that it falsely threatened legal action against consumers from whom they were attempting to collect debts for clients, in violation of the Fair Debt Collection Practices Act (FDCPA). In addition, the FTC charged that Allied contacted consumers at their places of employment even after they knew that the consumer's employer prohibited such contact. The Trevose, Pennsylvania-based company has agreed to a settlement of these charges that would prohibit the company from violating these provisions of the FDCPA and would require the company to pay a civil penalty of $140,000.
The FDCPA prohibits abusive, unfair or deceptive debt collection practices. Under the FDCPA, a debt collector may not discuss the debt with anyone other than the consumers and certain other persons, such as the consumer's attorney or spouse; use obscene, abusive, or profane language; or contact a consumer at inconvenient times, such as before 8 a.m. or after 9 p.m. Also, debt collectors may not make false statements, use false company names, or threaten any action they cannot or do not intend to take.
According to the FTC's complaint detailing the charges, Allied, on numerous occasions, and often during the first telephone contact with consumers from whom they were trying to collect payment, used language that falsely threatened that consumers may be sued, when there was no reasonable likelihood that they would be sued. Further, the complaint alleges that Allied called consumers at work when they knew the consumers' employers prohibited such calls.
Allied has signed a consent decree, which requires approval by the court, to settle these allegations. Under the terms of the consent decree, Allied would be prohibited from using false, deceptive or misleading representations, including false threats of a lawsuit. Allied also would be permanently prohibited from communicating with consumers at times or places that Allied knows or should know are inconvenient to the consumer, such as a consumer's place of employment after Allied knows or has reason to know that the consumer's employer prohibits such contacts.
Additionally, Allied would be required to make the following disclosure, clearly and conspicuously, on each initial written contact sent to a consumer:
"The law requires us to stop contacting you about this debt if you write to us and ask us to stop. However, under the law, we may still contact you for two reasons:
- to advise you that we or your creditor intend(s) to pursue specific remedies permitted by law: or
- to advise you that our efforts are being terminated.
This law is enforced by the Federal Trade Commission, Washington D.C. 20580."
The settlement would also require Allied to provide each of its present and future employees a notice, and to retain a signed acknowledgment from each such employee. The notice would state:
Debt collectors must comply with the federal Fair Debt Collection Practices Act, which limits our activities in trying to collect money from consumers. Most importantly, Section 805 (a) (1) of the Act says that you may not contact a consumer at work or any other place you know or should know is inconvenient to the consumer, and Section 805 (a) (3) of the Act says that you may not contact a consumer at work if you know that the consumer's employer prohibits such contacts. Individual debt collectors may be financially liable for their violations of the Act.
Finally, the settlement would require Allied to pay a civil penalty in the amount of $140,000.
On behalf of the FTC, the Department of Justice today filed the complaint and proposed settlement in the U.S. District Court for the Eastern District of Pennsylvania, in Philadelphia. The Commission vote to refer the complaint and proposed settlement to the DOJ for filing was 5-0.
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.
Consumers' rights and debt collectors' responsibilities under the FDCPA are outlined in a consumer brochure, "Fair Debt Collection," which is available from the FTC's Public Reference Branch.
Copies of the complaint and proposed consent decree also 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
(Civil Action No. 96-CV-1086)
(FTC Matter No. 922 3286)