The Texas Attorney Generalâ€™s Office has charged a Houston-based debt collection firm for deceiving and threatening delinquent payday loan customers.
Payday loans are short-term loans that offer struggling consumers advances on their paychecks and can provide a measure of temporary debt management, such as emergency funds for bill payments.
According to Attorney General Greg Abbottâ€™s complaint, representatives of First Integral Recovery LLC, a third-party debt collection company specializing in payday loan collection, allegedly called delinquent payday loan customers and unlawfully claimed the company was associated with law enforcement agencies. The companyâ€™s representatives then allegedly threatened debtors with arrest, prosecution, and imprisonment if debtors failed to pay. Additionally, representatives of First Integral Recovery allegedly intimidated debtors by using profanity during debt collection calls.
The company was also charged with failing to properly verify whether alleged debtors actually owed the debts, even after debtors requested additional information or insisted they had not incurred the debts in question, and for routinely refusing to identify the alleged creditor or whose behalf they were calling (â€śTexas Attorney General Charges Houston Debt Collection Firm with Deceiving Consumers,â€ť Office of the Attorney General of Texas press release, Dec. 12, 2011).
Under Texas law, it is illegal for debt collectors to deceive, harass, or intimidate debtors, and debt collection companies are required to identify the names of creditors and verify individual debts. Texas law also requires that third-party debt collectors post a surety bond with the Texas Secretary of State to legally operate in the state, something that First Integral Recovery allegedly did not do during a seven-month period in 2010.
Abbottâ€™s complaint seeks civil penalties for violations of the Texas Deceptive Trade Practices Act and the stateâ€™s Finance Code.
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