GLENDALE (CNS) – A Glendale collection agency has agreed to pay $1 million to resolve a lawsuit accusing it of sending unlawful text messages to debtors and inappropriately disclosing the debts to their family, friends and co-workers, it was reported today.
The Federal Trade Commission had accused National Attorney Collection Services Inc. of falsely portraying itself as a law firm in texts, telephone calls and by mail, the Los Angeles Times reported. In some cases, the FTC lawsuit said, the company falsely threatened to have debtors arrested.
The FTC also accused the company and its chief executive, Archie Donovan, of illegally revealing debts to consumers’ family members, friends and co-workers. U.S. law does not allow debt collectors to publicly disclose someone’s private debts because doing so could endanger their jobs and reputations, the FTC said.
Many of the debtors had fallen behind on payments to payday loan companies, the FTC said in its lawsuit, filed at U.S. District Court in Los Angeles, according to The Times.
It is not unlawful for a debt collector to communicate by text message, the FTC said. But the communication must be factual and must include disclosures about the debtors’ legal rights.
In addition to the $1 million civil penalty, the settlement requires the defendants to stop sending text messages that do not include the required disclosures and to obtain the consent of consumers before contacting them by text message, The Times reported. The defendants were also barred from falsely claiming to be law firms.