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Robert Trigaux

FTC fines collector of "expired" debt with Tampa call center, but no admission of wrongdoing

31

January

Update: The Florida Attorney General's Office is investigating Asset Acceptance, the debt collection agency examined below, to see if it violated the state's Deceptive and Unfair Trade Practices Act, the South Florida Sun-Sentinel reports here.

Wake up and good morning. In a federal courtroom in Tampa, the Federal Trade Commission is pursuing a promised crackdown on the booming debt-collection industry, announcing a $2.5 million settlement with a national company operating a major Tampa Bay call center for allegedly coercing borrowers into paying debts they no longer legally owed.

aacc_logo_small.gifThe FTC settlement with Michigan-based Asset Acceptance Corp., one of the nation's largest buyers of soured consumer debts, is the second-biggest penalty ever levied by the FTC against a debt collector. Officials said they are investigating other companies for alleged violations of federal law and expect to announce more enforcement actions soon, the Wall Street Journal reports. "More cases are on the way," Tony West, an assistant attorney general in the Justice Department's civil division, tells the Journal.

 

In essence, the FTC complaint zings Asset Acceptance for the type of call center habits we have all grown to disdain. Calling wrong numbers to harass people, then ignoring claims they called the wrong number? Yep. Urging people with old debts that they can no longer be sued for to make a partial payment -- that by doing so "renews" the debt and thus enables people to then be sued? Yep.

 

This is a dubious business model: If the debtor agrees to make even a single payment on an expired debt, the clock starts over on some part of the old obligation, a process the industry calls "re-aging." The practice was the subject of a Page One Article in The Wall Street Journal in December.

 

Here's the cold reality. The debt-collection industry is booming as many Americans struggle to catch up on their payments or walk away from what they owe. In 2011, debt collection was the subject of more than 164,000 complaints -- a record, according to the Federal Trade Commission. The total is at least 17 percent higher than the 140,036 debt-collection complaints the FTC got for all of 2010.

 

In this case, the good news is the FTC did something. The bad news is $2.5 million is about as hard hitting as a parking ticket. And, here's the clincher from the company's own press release: "The consent decree ends an FTC investigation begun in February 2006, without any admission by Asset Acceptance of the FTC’s claims. The Company does not expect the operational requirements of the consent decree to have a material adverse effect on its business."

 

Read this list of Q&As from Asset Acceptance about this FTC "consent decree" and see how little it means to the company.

 

According to the 30 page FTC complaint (you can see it yourself by hitting the "complaint" link in the 6th paragraph of this FTC news release), Asset Acceptance runs four call centers including one at 2840 South Falkenburg Road in Riverview, Fla.

 

 

The FTC's nine-count complaint charged Asset Acceptance with:

  • misrepresenting that consumers owed a debt when it could not substantiate its representations;
  • failing to disclose that debts are too old to be legally enforceable or that a partial payment would extend the time a debt could be legally enforceable;
  • providing information to credit reporting agencies, while knowing or having reasonable cause to believe that the information was inaccurate;
  • failing to notify consumers in writing that it provided negative information to a credit reporting agency;
  • failing to conduct a reasonable investigation when it received a notice of dispute from a credit reporting agency;
  • repeatedly calling third parties who do not owe a debt;
  • informing third parties about a debt;
  • using illegal debt-collection practices, including misrepresenting the character, amount, or legal status of a debt; providing inaccurate information to credit reporting agencies; and making false representations to collect a debt; and
  • failing to provide verification of the debt and continuing to attempt to collect a debt when it is disputed by the consumer.

Asset Acceptance specializes in buying portfolios of consumer debt from credit card firms, health clubs and other credit originators at deep discounts and then collecting on them. The FTC said the firm targets accounts that were previously pursued by other collectors to no avail. Asset’s strategy "includes pursuing consumers for ten years or longer," the government’s complaint said.

The FTC complaint specifically targets the debts bought from the health club chain Bally's Total Fitness, noting the poor quality of the records because they often lack Social Security numbers or those numbers were not accurate. "Many consumers have disputed Bally's debts that Asset (Acceptance) attempts to collect," the complaint states. The FTC cited a "pattern of incomplete or erroneous data" used by the debt collection firm. 

As reported by the New York Times, the settlement requires Asset Acceptance to take more responsibility for checking the statute of limitations before it contacts consumers. But Robert Hobbs, deputy director at the National Consumer Law Center and author of "Fair Debt Collection," said most states did not require debt collectors to do that. "That means it is up to consumers," Hobbs said, "to know the rules on the statute of limitations," which, he said, can be "an enormously complex legal question."

-- Robert Trigaux, Business Columnist,

Tampa Bay Times

 

[Last modified: Tuesday, January 31, 2012 4:52pm]

    

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