Civil Litigation

FTC Settlement with Debt Collector over Text Messages

Last month, the Federal Trade Commission (FTC) extracted a $1 million settlement from a debt collector who used text messaging to attempt to collect debts in an allegedly unlawful manner.  The FTC charged a California-based debt collector who owned two debt collection companies—National Attorney Collection Services, Inc. and National Attorney Services LLC—with violations of the FDCPA and FTC Act for failure to disclose that the companies were debt collectors and for deceptive practices arising from use of company names that implied that the debt collectors were law firms.  In addition, the debt collectors allegedly disclosed consumer debts to family members by sending envelopes to the consumer displaying a picture of a large arm shaking money from a consumer who is being held upside down.  This settlement is significant as it marks the first FTC action against a debt collector for unlawful text messaging.  It also serves as an important reminder that debt collectors must comply with applicable law regardless of the manner in which they communicate with consumers.

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