FOR RELEASE: MAY 17, 1995
FTC CHARGES CALIFORNIA COMPANY WITH USING DECEPTIVE DEBT
COLLECTION PRACTICES; Two of the Individual Defendants
Agree to Settle FTC Charges
The Federal Trade Commission has leveled charges against
Trans Continental Affiliates (TCA), a California debt-collection
agency, and two of its principals, for using abusive and
deceptive practices when attempting to collect debts from
consumers, in violation of the Fair Debt Collection Practices Act
(FDCPA). Another of TCA's former principals, and TCA's attorney,
who engaged in debt collection activities, have agreed to settle
related FTC charges under separate consent decrees that would
prohibit them from engaging in similar practices in the future
and require the attorney to pay a $2,000 civil penalty.
The FTC has asked a federal court to issue an order to
permanently prohibit TCA, its president Stephen Lawrence, and its
chief financial officer Effie Pappas from violating the FDCPA,
and to assess civil penalties against them up to $10,000 for each
violation. A hearing on the charges should be scheduled shortly.
The settlements are with TCA's former senior vice president David
Siebert, and a private attorney James R. Brown. All of the
defendants have maintained offices in the San Francisco Bay area.
The FDCPA is the federal law that prohibits abusive, unfair
or deceptive debt collection practices. Under the FDCPA, a debt
collector may not discuss debts with anyone other than the
consumers who owe them and certain other persons, such as the
consumer's attorney or spouse; use obscene, abusive, or profane
language; or contact a consumer at an inconvenient time. Also,
debt collectors may not make false statements, use false names,
or threaten a legal action they do not intend to take, under the
FDCPA.
According to the three FTC complaints in this matter, the
defendants and/or TCA collectors under their control, violated
the FDCPA on numerous occasions by, among other things:
-- using obscene and profane language or letting the
telephone ring repeatedly with the intent to annoy or
harass;
-- misrepresenting that nonpayment of a debt would result
in arrest or imprisonment, or that a consumer's wages
would be garnished;
-- falsely representing that they were attorneys, or
threatening to take legal action such as filing a
lawsuit, when they did not intend to do so;
-- continuing to try to collect debts after consumers
notified the defendants in writing that the debts were
disputed, and before the defendants verified the debts;
-- contacting consumers at times or places they knew or
should have known to be inconvenient to the consumer,
such as before 8 a.m. or after 9 p.m.;
-- calling consumers at work when they knew, or had reason
to know, the consumers' employers prohibited such
calls;
-- communicating with third parties for purposes other
than acquiring location information about the consumer,
without the consumer's express consent; and
-- continuing to contact consumers after having received
written requests to cease doing so.
In addition to asking the court to prohibit TCA, Lawrence
and Pappas from further violating the FDCPA and to order them to
pay civil penalties, the FTC has asked that they be required to
include, in each collection letter to consumers in the future,
the following disclosure:
"Collection agencies like us must comply with a federal law
that grants you certain rights. One of these is the right
to have us stop communicating with you about this debt. If
you write to us asking us to stop, we will. But if you owe
this debt, you will still owe it and your creditor may
continue to collect it from you. This law is administered
by the Division of Credit Practices, Federal Trade
Commission, Washington, D.C., 20580.
TCA, Inc.--05/17/95)
The FTC also has asked the court to require these defendants
to provide each of their present and future employees a notice,
and to retain a signed acknowledgement from each such employee.
The notice would state:
Debt collectors must comply with the federal Fair Debt
Collection Practices Act, which limits our activities in
trying to collect money from consumers. Most importantly,
Section 805(b) of the Act says that, unless the consumer
consents, a debt collector may not discuss the debt with any
person other than the consumer and a few other persons, such
as the consumer's attorney or spouse. Individual debt
collectors may be financially liable for their violations of
the Act.
The proposed settlement agreements with Siebert and Brown
would require them to make this same notification to employees
for the next five years. Under his settlement, Siebert also
would make the same consumer disclosure referenced above, for
five years. When Brown acts as an attorney on behalf of debt
collectors contacting consumers, his settlement would require him
to ensure the collection letters include the following disclosure
for the next five years:
(i) A law office doing debt collection like us must comply
with a federal law that grants you certain rights. One of
these is the right to have us stop communicating with you
about this debt. If you write to us asking us to stop, we
will. But if you owe this debt, you still owe it and your
creditor may continue to collect it from you. This law is
administered by the Division of Credit Practices, Federal
Trade Commission, Washington, D.C., 20580.
(ii) If you feel that the debt is being collected by
unlawful means, you may contact the Division of Credit
Practices, Federal Trade Commission, Washington, D.C.
20580.
The settlements also would prohibit Siebert and Brown from
engaging in any of the alleged illegal debt-collection practices.
Further, Siebert and Brown would be required to submit within
three business days after the entry of the consent decree, sworn
statements which attest to the truthfulness of financial dis-
closures made to the FTC during settlement negotiations. If the
court were to find that they omitted any information material to
the case, the court could reopen the settlement to obtain a civil
penalty. Brown's $2,000 civil penalty would be due five days
after the court enters the settlement.
The Commission vote to authorize filing of the three
complaints and two consent decrees was 4-0. The complaints and
consent decrees were filed at the FTC's request by the Department
of Justice in U.S. District Court for the Northern District of
California, in San Francisco on May 15. The consent decrees are
subject to court approval.
NOTE: The Commission authorizes the filing of a complaint when
it has "reason to believe" that the law has been or is being
violated, and it appears to the Commission that a proceeding is
in the public interest. The complaint is not a finding or ruling
that the defendant actually has violated the law. The case will
be decided by the court. Consent decrees are for settlement
purposes only and do not constitute an admission by the
defendants of a law violation. Consent decrees have the force of
law when signed by the judge.
Consumers' rights and debt collectors' responsibilities
under the FDCPA are outlined in a consumer brochure, "Fair Debt
Collection," which is available free from the address below.
Copies of the complaints and consent decrees are available
from the FTC's Public Reference Branch, Room 130, 6th Street and
Pennsylvania Avenue, N.W., Washington, D.C. 20580.
(FTC File No. 942 3020)
(Civil Action Nos. not available at press time)
(TCA)
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