FTC Announces Settlement Of First Text Message Debt Collection Action

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On September 25, the FTC announced the settlement of its first case against a debt collector for using text messaging to attempt to collect debts in an allegedly unlawful manner. The complaint, filed on August 23, alleged that an individual and the two debt collection companies he controlled violated the FDCPA and FTC Act when the companies failed to disclose in English- and Spanish-language text messages and phone calls that the companies were debt collectors and that they falsely portrayed themselves as law firms. The FTC also alleged that the defendants illegally revealed debts to the consumers’ family members, friends, and co-workers. To resolve the FTC’s claims, the companies agreed to pay a $1 million civil penalty, agreed not to send text messages omitting the disclosures required by law and agreed to obtain a consumer’s express consent before contacting them by text message. The defendants are also barred from falsely claiming to be law firms and from falsely threatening to sue or take any action – such as seizure of property or garnishment – that they do not actually intend to take.