Account Portfolios, Inc. (API), and a subsidiary, Perimeter Credit, L.L.C., have agreed to pay a $300,000 civil penalty as part of a settlement with the Federal Trade Commission to resolve allegations that they violated the Fair Debt Collection Practices Act (FDCPA) when attempting to collect delinquent health spa accounts they had purchased from Bally's Health and Tennis Corporation. According to the FTC, Perimeter's debt collectors harassed consumers, made false and misleading representations, failed to send required validation notices, failed to verify debts when requested to do so by consumers, and made impermissible third party contacts regarding consumers' debts. In addition to the civil penalty, the proposed consent decree to settle the FTC charges includes broad prohibitions on future FDCPA violations, and would require Perimeter to inform consumers it contacts in writing that they may stop the company from contacting them about the debt.
The FDCPA prohibits abusive, deceptive and unfair debt collection practices. For example, in an effort to collect a debt, collectors may not make false statements, use obscene or profane language, threaten to take legal action they cannot or do not intend to take, call consumers at work if they know it is inconvenient or not permitted by the employer, or call consumers at other times they know to be inconvenient to the consumer, such as before 8:00 a.m. or after 9:00 p.m.
According to the FTC's complaint detailing the charges, when attempting to collect delinquent Bally's accounts, Perimeter and API repeatedly violated the FDCPA by:
- calling consumers at work when they knew the consumers' employers prohibited such calls;
- calling consumers at times or places that they knew or should have known were inconvenient;
- communicating with third parties for purposes other than acquiring location information about consumers, without consumers' consent;
- communicating with consumers after consumers notified Perimeter, in writing, to cease further communication about the debt;
- using obscene or profane language;
- communicating or threatening to communicate to persons, credit information Perimeter knew, or should have known was false, and failing to communicate that a disputed debt is disputed;
- failing to notify consumers of their right to dispute and obtain verification of their debts, and to obtain the name of the original creditor; and
- continuing to try to collect debts after consumers disputed them in writing, and before the defendants verified the debts.
The proposed consent decree to settle the allegations, in addition to requiring the $300,000 civil penalty, would prohibit the Atlanta, Georgia-based companies from violating any provisions of the FDCPA in the future. Further, when attempting to collecting delinquent Bally's accounts, the defendants must include the following disclosure in all written correspondence with a consumer concerning the delinquent account:
*The law requires us to stop communicating with 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 intend 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 proposed settlement would also require the defendants to provide a notice to each of its present and future employees having responsibility for debt collection, and to obtain a signed statement acknowledging receipt of the notice. 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 806 of the Act prohibits you from harassing, oppressing, or abusing a person, including, but not limited to, using obscene or profane language. In addition, Section 807 of the Act prohibits you from using false, deceptive or misleading representations, including communicating false information about a person's credit history. Individual debt collectors may be financially liable for their violations of the Act.
Finally, the consent decree contains a number of reporting and record keeping requirements that will assist the FTC in monitoring compliance with the terms of the settlement.
This matter was handled by the FTC's Atlanta Regional Office. The complaint and the proposed consent decree were filed by the Department of Justice on behalf of the FTC in the U.S. District Court for the Northern District of Georgia, Atlanta Division, this morning. The Commission vote to refer the complaint and proposed consent decree to DOJ for filing was 4-0.
NOTE: This consent decree is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent decrees are subject to the court's approval and have the force of law when signed by the judge.
Copies of the complaint, the proposed consent decree, and the FTC's brochure explaining the FDCPA, are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD 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.
(Civil Action No.: 1:99-CV-0454)
(FTC File No.: 952 3142)
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