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Collection Agencies Who Violate the Law 

Written by: Kristy Welsh

Last Updated: October 24, 2017

Do collection agencies violate the law? You bet they do. So, who regulates the debt collection industry? The Consumer Financial Protection Bureau took over the regulation of debt collectors and handling of debt collection complaints from the Federal Trade Commission (FTC) in late 2011. However, today, the FTC still takes an active role in cracking down on illegal debt collection practices. According to the FTC letter to CFPB in March 2013, seven debt collection cases were resolved in 2012. These cases involved collectors whose practices included using abusive tactics to intimidate consumers, misleading consumers while seeking payment on time-barred debts, using faulty data to identify debtors and the amount they owe, using deceptive tactics to collect on payday loans, and otherwise committing egregious violations of the Act and other federal laws.

In their last report on debt collection practices in 2011, the FTC reported that hundreds of thousands of consumers contacted the FTC in that year with complaints regarding debt collection issues. In 2011, the FTC received more complaints about the debt collection industry than any other specific industry. In 2010, the FTC received a total of 140,036 complaints which accounted for 27 percent of all complaints received by the FTC. This was up over 4 percent from 2009.

There are many cases of collections agencies performing illegal acts. Imagine the number of companies who have not been caught yet! Collection agency stocks are now traded on Wall Street but are more unscrupulous than ever.

FTC Lawsuits in 2011-2012

In two cases that included civil penalties, the FTC obtained $2.8 million and $2.5 million, respectively, for West Asset Management, Inc., and Asset Acceptance, LLC, the two largest civil penalty amounts the agency has ever obtained for alleged violations of the Fair Debt Collection Practices Act.

The FTC charged two other debt collectors with especially egregious practices: Defendants in Forensic Case Management Service, Inc., doing business as Rumson, Bolling & Associates, allegedly threatened physical harm to consumers, desecration of their deceased family members, and killing of their pets to persuade consumers to pay.

FTC Lawsuits in 2010

Here are some recent court cases which were settled in 2010 against collection agencies caught in the act of illegal practices:

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FTC Lawsuits in 2009

FTC Lawsuits for 2008

The Commission surpassed its 2007 record for the largest amount of civil penalties obtained in a single FDCPA case with the following settlement:

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