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Regulators Fine Debt Collection Agency $1.4M for 'Abusive Tactics'

November 6, 2007 - 4:28 p.m.

WASHINGTON (AP) - A Houston-based debt collection company agreed to pay a $1.4 million penalty to settle charges that it illegally threatened and harassed consumers, the Federal Trade Commission said Tuesday.

The FTC alleged that LTD Financial Services LP falsely implied that it could garnish individuals' wages, seize their property, or file lawsuits against them. The company collects on 1.25 million accounts per year, the agency said.

LTD Financial also allegedly called consumers at their workplaces, the FTC said, and "sometimes used racial slurs and profanity." Supervisors and managers were aware and sometimes participated in the practices, the agency said.

Hundreds of complaints against LTD were filed with the FTC, the Houston Better Business Bureau and several state attorneys general, but the company's attitude towards complaints "is cavalier at best," the FTC said.

In a written statement, the company said it is "puzzled about why we were chosen for investigation." Based on information it received from the FTC in a Freedom of Information Act request, LTD said its "complaint ratio" — the number of complaints per consumer contact — "is lower than most other major collection agencies."

The company also said it agreed to the settlement, which does not constitute an admission of guilt, "to avoid costly litigation."

In addition to the fine, the settlement bars the company and its owners and managers from using false or misleading practices, such as threatening to garnish wages, the FTC said.

The settlement has been filed by the Justice Department on behalf of the FTC in the U.S. District Court for the Southern District of Texas. If approved by the court, violations of the settlement can result in additional fines.

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