The FTC said recently that the collection agency Asset Capital Management Group purchased debt from creditors and, in an effort to collect from consumers, it “extorted payments from them using false threats.” The illegal and underhanded tactics the company allegedly used included threatening debtors with arrest, disclosing the debts to employers and relatives, and saying they would seize their property. Additionally, the FTC accused the company of numerous other violations of the Fair Debt Collection Practices Act, including failing to disclose details of the debt they were collecting and not notifying consumers of their rights to have the debt verified and to be able to dispute it.
As a result of the violations, about 95,000 consumers will be getting a total of nearly $4 million as a cash award which equals about $42.00 each. Asset Capital Management resolved the charges last year with a $90 million settlement, but most of the fee was suspended. However, the FTC did freeze the company’s assets and required the individuals involved in the scheme to surrender their personal assets. Together, that amounted to the $4 million of refunds. Asset Capital Management was also banned from the debt collection industry.
The violations that Asset Capital Management was found guilty of is typical of the collection industry in general. Many collections agencies routinely violate consumer laws during their collection process. Sometimes it is blatant, as in the case with ACM, and other times it is more conspicuous. Sometimes too, an out-of-state collector is not familiar with statues that may be in place for consumers in the state from which they are trying to collect. So they end up violating the law, but not on purpose. However, that doesn’t matter, they are still subject to law suits and fines.
Due to the immense profit that is made in the collection industry, the collectors are usually more than willing to take a chance that what they are doing could be against the law. Evidently ACM pushed the envelope a little too far with their chances.
California is an extremely consumer-friendly state and collection protocols often violate this state’s statutes. The collectors act with impunity because the odds of getting caught are remote. Perhaps the law suit won against ACM will cause the industry to be a more forthright and honest in their collection process. We’ll see.
Meanwhile, the meager $42.00 each consumer received in the cited suit is typical of a class action suit where all the victims are pooled and share in the award money. It may be better to have each case handled separately to avoid sharing in an award pool.
Here at the Heritage Group, our clients whose rights are violated can be represented by our attorney without cost. They are also not grouped into a class action. As a result, our clients routinely receive $1,000 or much more through a cash award!
If you are dealing with a collection agency or any credit issues, feel free to contact us to determine if there has been a violation. There is no charge for a credit analysis with the Heritage Group.