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Debt collector fined $1 million for claiming to be a law firm

Debt collector fined $1 million for claiming to be a law firm


Debt collector fined $1 million for claiming to be a law firm

Debt collector fined $1 million for claiming to be a law firmThe Federal Trade Commission (FTC) regularly sues debt collectors who use illegal collection practices. However, a recent legal matter was different. The FTC went after a debt collection agency for texting consumers as part of the debt collection process. National Attorney Collection Services, Inc. and National Attorney Services LLC, both owned by Archie Donovan and based in Glendale, Calif., have agreed to pay $1 million as settlement in the case.

While it is not illegal to use text messages to collect a debt, they never identified themselves as debt collectors. Federal law requires debt collectors to disclose that the purpose of the contact is to collect a debt. Also, the names of the companies give the false impression that they are a law firm, which they are not. According to the FTC, the collectors had the tendency to represent themselves as attorneys and legal assistants during their phone calls and through the text messages.

Another way the companies broke the law is that the collectors revealed the debts of consumers to friends, families and co-workers, violating the privacy of clients. They provided information of the debt by using envelopes that feature a cartoon that shows a man having his pockets emptied by Uncle Sam. Because of privacy laws, debt collectors cannot reveal that an envelope contains a debt collection notice.  There have also been allegations that the collectors directly disclosed debts to relatives and friends of the consumers through phone calls and texts. The Fair Debt Collection Practices Act does not allow agencies to shame consumers.

In addition to paying the $1 million fine, both companies must immediately stop any debt collection practices that violate the FDCPA or other consumer collection laws. They must also change the names of the businesses to stop giving people the impression that they are a law firm.

There are federal laws that protect the rights of consumers in such situations, particularly through the debt collection process. The FTC has been cracking down on debt collectors who violate the FDCPA or the Fair Credit Reporting Act (FCRA).

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About Stephany Wilson

Stephany Wilson covers business and finance related news.

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