FTC wins largest civil penalty on nasty debt collector: $2.8M

The Federal Trade Commission said West Asset Management violated federal law

An aggressive debt collection agency that took money from customer accounts without permision, used abusive language when it called and falsely claimed that consumers would be sued, arrested, or have their property seized for nonpayment of their debt has agreed to pay a civil penalty of $2.8 million to settle Federal Trade Commission charges it violated federal laws.

According to the FTC's filing, thousands of consumer complaints have been filed against West Asset Management, which employs 1,500 debt collectors in 13 states and one offshore location. West Asset Management debt collectors allegedly violated the Fair Debt Collection Practices Act by calling consumers multiple times each day, often about accounts that did not belong to them, and sometimes using rude and abusive language. The FTC further charged that the company also illegally disclosed the existence of consumers' debts to third parties and ignored consumers' written demands that West Asset Management stop calling them.

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The FTC said the company allegedly withdrew funds from consumers' bank accounts or charged their credit cards without consent and falsely claimed that partial payments would be accepted as full settlement on accounts and that negative information would stay on consumers' credit reports until debts were paid. According to the complaint, West Asset Management has collected on more than 24 million accounts on behalf of clients in the healthcare, telecommunications, consumer credit, and government service industries.

The settlement imposes a $2.8 million civil penalty, which is the largest civil penalty obtained by the FTC in a debt collection case.

The case is but one example of why the FTC wants to review how debt collectors work, especially with high-tech tools at their disposal. The agency will in April  hold a public workshop that looks at how it can better protect  consumers from the high-tech onslaught some debt collection firms are using. 

 From the FTC: "The workshop will explore developments in technology that debt collectors use to gather, store, and manage information about consumers; to comply with the law; to communicate with consumers; and to receive payment. The workshop will provide an opportunity for government regulators, industry members, technologists, consumer advocates, and researchers, to discuss the costs and benefits of these technologies for debt collectors and consumers. It will also address whether and how collectors may use such technologies consistent with applicable laws, including the Fair Debt Collection Practices Act and Section 5 of the FTC Act, what consumer protection concerns arise from use of these technologies, and what actions, if any, the Commission and other policymakers should take to respond to those concerns. "

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