In the largest civil penalty the Federal Trade Commission has ever obtained in a debt collection case, Academy Collection Service, Inc. and owner Keith Dickstein have agreed to pay $2.25 million in fines to settle allegations that the company used misleading and unlawful collections practices (“Nationwide Debt Collector Will Pay $2.25 Million to Settle FTC Charges,” FTC Press Release, Nov. 21, 2008).

Without admitting wrongdoing involving the charges against it, Academy Collection Service has agreed to pay the fine and to refrain from: misrepresenting debts to consumers, using false, deceptive, or misleading tactics in debt collection efforts, and improperly communicating with third parties regarding a debt.

According to the FTC complaint, the company violated the FTC Act and the Fair Debt Collection Practices Act by illegally withdrawing funds from debtors’ bank accounts and by threatening to garnish debtors’ wages, seize their property, sue them, or have them arrested in order to recover unpaid debts.

“In truth and in fact … [Academy Collection Service] had no legal authority or intent to garnish consumers’ wages, seize or attain consumers’ property, initiate lawsuits against consumers if they failed to pay Academy, or have consumers prosecuted or arrested,” the lawsuit stated (“LV Debt Collection Agency to Pay $2.25 Million,” Las Vegas Business Press, Dec. 1, 2008).

Company Officials Ignored Consumer Complaints

Consumers filed more than 1,000 complaints against Academy Collection Service through the FTC, several state attorney general offices, the Nevada and Pennsylvania Better Business Bureaus, and the company itself. The FTC alleges that consumer complaints made to Academy Collection Service employees were dismissed without sufficient investigation and that the company did not properly discipline collectors who were terminated for violating the Fair Debt Collection Practices Act — these collectors often returned to work within a few weeks or months.

“These defendants are responsible for their debt collectors’ abusive practices,” said Lydia Parnes, director of the FTC’s Bureau of Consumer Protection. “They ignored people’s complaints and rewarded the collectors who broke the law. This is not a business model that the FTC tolerates.”

The majority of complaints made against the collection company, which is based in Philadelphia and has a second office in Las Vegas, stemmed from the collection practices of the Las Vegas office, which was overseen by Edward Hurt III and Albert Bastian (“Debt Collection Agency Fined $2.25 Million by FTC,” Inside ARM, Nov. 24, 2008).

“The Las Vegas office was clearly the nexus for a lot of the [violating] activity,” said Leonard Gordon, director of the FTC’s Northeast Regional Office. “And these two men ran that office.” Although named as defendants in the suit, the investigation into the two men’s activities is currently ongoing.

Had Academy Collection Service not settled the complaint, Dickstein and the company would have faced potential fines of up to $11,000 per violation.

Popularity: 4% [?]

Related posts:

1. Oregon Debt Collection Agency Shut Down for Fraudulent Activities
2. NYC Mortgage Default Rate Approaches National Average
3. Number of Americans With Bad Credit Balloons to 110 Million
4. Final Guilty Plea Ends FTC Lawsuit Against Fraudulent Consumer Credit Counseling Companies
5. Regulators Stumped: High Number of Homeowners Re-defaulting