LARGEST JUDGMENT IN FTC HISTORY FOR DEBT COLLECTIONS VIOLATIONS

The United States District Court in the District of New Jersey awarded the Federal Trade Commission a $10.2 million judgment and an injunction against a debt collection company earlier this month.  According to the FTC, this judgment constitutes the largest in FTC history for violations of the Fair Debt Collections Practices Act (FDCPA). 

In Federal Trade Commission v. Check Enforcement, et al., the FTC filed a complaint in 2003 alleging, among other things, that Defendants’ debt collection practices on NSF checks violated the FDCPA and the Federal Trade Commission Act.  According to the complaint, Defendants purportedly routinely sent collection letters that failed to identify the face value of the NSF check and merely stated the total amount due without noting the additional charges they were attempting to impose.  Defendants also allegedly threatened consumers with arrest and prosecution through collection letters and harassing telephone calls.  Those who attempted to assert their rights under the FDCPA were further abused and harassed. 

Among Defendants’ arguments were that the check writers’ actions were tantamount to criminal conduct and thus, they should not be afforded the protections of the FDCPA.  Since the FDCPA did not apply, according to the Defendants, then the Defendants could not be considered “debt collectors” subject to the FDCPA.  The Court rejected these arguments and stated, among other things, that Defendants satisfied the FDCPA definition of “debt collector” in that they used “any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts” and they regularly collected or attempted to collect “directly or indirectly, debts owed or due or asserted to be owed or due another.”  The Court further reasoned that there was insufficient evidence that the check writers intentionally wrote checks on accounts with insufficient funds or on closed accounts with the intent to steal the service or merchandise provided.

To read a full copy of the opinion and final order of the Court, as well as other pleadings filed in this case, click here.

For further information contact Mary A. Zambreno.