Memphis-based debt collector Regional Adjustment Bureau has reached a settlement with the Federal Trade Commission (FTC), under which it will pay a $1.5 million civil penalty.
The FTC complaint accused the company of repeatedly calling consumers and accusing them of owing debts that they did not owe as well as contacting them at work, knowing that their employers did not allow the calls. The debt collector also allegedly made unauthorized withdrawals from consumers’ bank accounts and disclosed confidential information about them to third parties. It is charged with violating the FTC Act and the Fair Debt Collection Practices Act. Now, whenever a consumer disputes the validity or the amount of a debt, Regional Adjustment Bureau must either close the account and cease collection efforts or suspend collection until it has verified that the information about the debt is accurate and complete.
In another case, the FTC charged Credit Smart LLC and several associated companies and individuals with using unfair and deceptive tactics, such as leaving pre-recorded messages for consumers that pretended to offer financial relief. Collectors allegedly falsely threatened to sue debtors or garnish their wages, neither of which they may do without a court order. The defendants also allegedly threatened to collect on debts that were beyond the statute of limitations and refused to provide information that consumers were legally entitled to request.
Under a proposed settlement, the defendants must stop illegal debt collection tactics and provide consumers with a disclosure that explains their rights regarding time-barred debt and how to file a complaint with the FTC. The order also imposes a $1.2 million civil fine, though all but $490,000 of the penalty is suspended due to the defendants’ inability to pay.