Recently, the Federal Trade Commission (the “FTC”) took aim at a debt collection agency by filing a complaint in federal court in Texas. The FTC can file a complaint and can request a temporary restraining order when it has reason to believe that: (1) the law has been or is being violated; and (2) a proceeding is in the public interest.
After a hearing on January 28, 2013, a federal judge entered a preliminary injunction against a Houston-based debt collection operation that allegedly engaged in illegal behavior against consumers including using insults, lies, and false threats to collect on payday loans. For example, the debt collector allegedly told a Virginia woman that she would be arrested and jailed for three years, and would lose her disability payments if she did not pay a $980 debt. In granting the injunctive relief, the court froze the company’s assets, banned it from engaging in debt collection and appointed a receiver to take control of the business while the litigation moved forward.
These types of actions that involve such serious allegations create negative publicity for the industry as a whole. When a case like this surfaces, the debt collection industry must continue to spread the message of compliance so that one bad apple does not ruin the whole bunch.