Debt Collectors Using Terrible New Tactic Get Fined $1 Million

September 25, 2013
Huffington Post 
debt settlement news

Over the last 18 months, more than 1 million cell phones have received personalized text messages asking the recipients to call National Attorney Service about "a very sensitive matter." The texts were followed up with threatening phone calls from people who claimed to be law firm employees; and they intimated that consumers could face wage garnishment, litigation, arrest, and even jail if they failed to pay their debts. According to the Federal Trade Commission (FTC), National Attorney Service was part of a consortium of California debt-collection firms that used aggressive and deceptive tactics to get payments from consumers with small debts such as payday loans.

On Sept. 23, the agency announced a settlement against National Attorney Service in its first-ever debt-collection case related to unlawful text messages. The debt collection companies' chief executive, Archie Donovan, agreed to pay a $1 million civil penalty as part of the agreement, brought jointly by the FTC and the Justice Department's consumer protection division. Under the terms, the company also must stop using the names "National Attorney Service(s)", "National Attorney(s)," or "National Attorney Collection Service(s)." Texting has become yet another channel for businesses that use predatory practices. The FTC's national consumer complaint database shows that the number of incidents related to text-messaging scams more than doubled between 2011 and 2012. Christopher Koegel of the FTC's financial practices division also said that there are growing instances of debt collectors posing as attorneys or law firms to try to pressure consumers into paying debts. An estimated 30 percent of the FTC's debt collection complaints are related to these companies misrepresenting themselves as law firms.

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