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North American Capital Corporation (NACC) has agreed to pay a $250,000 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 delinquent consumer credit accounts.

According to the FTC, the company's debt collectors made impermissible third party contacts regarding consumers' debts, such as to the consumers' employers and co-workers; harassed consumers by using obscene or profane language; and made false and misleading representations, such as that the consumers' wages would be garnished and their property seized.

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 NACC to inform consumers it contacts in writing that they may stop the company from contacting them about the debt.

In effect since March 1978, 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 debts NACC repeatedly violated the FDCPA by:

  • communicating with third parties about consumers' debts without consumers' consent, for purposes other than acquiring location information about consumers;
  • using obscene, profane, or abusive language;
  • falsely implying that failure to pay the debt could result in arrest, imprisonment, or garnishment of wages; and
  • threatening to take action -- such as threatening to refer the matter for criminal prosecution -- when the company did not intend to do so.

The proposed consent decree to settle the allegations, in addition to requiring the $250,000 civil penalty, would prohibit the Buffalo, New York-based company from violating any provisions of the FDCPA in the future. Further, when attempting to collect debts, NACC must include the following disclosure in all written correspondence with a consumer concerning the delinquent account:

"This company must comply with a Federal law that provides consumers with certain rights. One of these is the right to have us stop communicating with you about this debt. If you write to us and ask us to stop communicating with you about this debt, we will. But if you owe this debt, you will still owe it and the debt may still be collected from you. If you have any concerns with the way we are collecting this debt, write to our CONTACT CENTER, [current address] or call us toll-free at 1-800- [current phone number] between 9:00 A.M. Eastern Time and 5:00 P.M. Eastern Time Monday - Friday."

The proposed settlement also would require the defendants to provide a notice to each of its present and future employees involved in the collection of debts, and to obtain and retain from those employees 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.

This matter was handled by the FTC's Northeast Region in New York. 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 Western District of New York, in Buffalo, on July 10. The Commission vote to refer the complaint and proposed consent decree to 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 are subject to the court's approval and have the force of law when signed by the judge.

Copies of the complaint and the proposed consent decree will be available soon 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; 1-877-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.

Howard Shapiro

Office of Public Affairs

202-326-2176

Robin E. Eichen or Barbara Anthony

Northeast Region

1 Bowling Green, Suite 318 New York,

New York 10004

212-607-2803 or 212-607-2829

(Civil Action No.: 00-CV-0600 E(Sc))
(FTC File No.: 992 3109)

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