FTC Settles with Debt Collector for Violations of FDCPA and FTC Act

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The FTC announced that it reached a settlement with a debt collector for violations of the Fair Debt Collection Practices Act and the FTC Act. The FDCPA generally governs collection practices by third-party debt collectors. According to the FTC complaint, the debt collector used text messages to collect debts without the debtor’s consent and without providing required disclosures, unlawfully claimed that it was a law firm, and used mailing envelopes with an image of a large arm holding a person hanging upside down and shaking money from his pockets. 

The terms of the settlement include a $1 million civil penalty. In addition to the monetary penalty, the debt collector is prohibited from, among other things, sending text messages without disclosing that it is a debt collector, including anything other than the debt collector’s address and business name on mailing envelopes, and representing or implying that it is a law firm. The debt collector is also required to obtain express consent before contacting a borrower by text message. The debt collector is also required to submit compliance report to the FTC detailing such things as their current address and businesses and describing their compliance with the settlement.

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this informational piece (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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