National Financial Systems Agrees to Pay $20,000 Civil Penalty to Settle Charges of Violating Fair Debt Collection Practices Act

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National Financial Systems, Inc. (NFS), based in Westbury, New York, has agreed to pay a $20,000 civil penalty as part of a settlement with the Federal Trade Commission to resolve allegations that it violated the Fair Debt Collection Practices Act (FDCPA) when attempting to collect debts on behalf of clients. According to the FTC, the company's debt collectors harassed consumers, made false and misleading representations and made impermissible third-party contacts regarding consumers' debts. In addition to the civil penalty, the proposed consent decree includes broad prohibitions on future FDCPA violations and would require NFS 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, NFS's collectors, on numerous occasions:

  • called consumers at work when they knew the consumers' employers prohibited such calls;
  • talked with third parties, including neighbors, children and employers, for purposes other than acquiring location information about consumers, without consumers' consent;
  • used obscene or profane language;
  • caused the telephone to ring, or engaged a person in telephone conversations, repeatedly or continuously, with the intent to annoy, abuse or harass a consumer;
  • falsely implied that failure to pay the debt could result in arrest, imprisonment, or garnishment of wages;
  • threatened to take action -- such as filing a lawsuit -- when they did not intend to do so; and
  • called consumers at times or places that they knew or should have known were inconvenient.

The proposed consent decree to settle the allegations, in addition to requiring the $20,000 civil penalty, would prohibit the company from violating any provisions of the FDCPA in the future. Further, when attempting to collect delinquent accounts, NFS must include the following disclosure in all written correspondence with consumers concerning the delinquent accounts:

Collection agencies must comply with a federal law that provides you with certain rights, including the right to have us stop communicating with you, if you make the request in writing. This law is administered by the Federal Trade Commission, One Bowling Green, Third Floor, New York, NY 10004.

The proposed settlement would also require NFS to provide a notice to each of its present and future employees who are responsible 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. 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.

The complaint and proposed settlement was filed at the FTC's request by the Department of Justice in U.S. District Court for the Eastern District of New York, in Brooklyn, on December 1, 1999. The Commission vote to refer the complaint and proposed settlement 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 and the consent decree are available from the FTC's web site at and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 877-FTC-HELP (877-382-4357); 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.

(FTC File No. 982 3130)

Contact Information

Media Contact:
Howard Shapiro
Office of Public Affairs
Staff Contact:
Robin E. Eichen
Northeast Region
One Bowling Green, Suite 318
New York, New York 10004