Academy Collection Service, Inc. and its owner, Keith Dickstein, have agreed to pay $2.25 million to settle Federal Trade Commission charges that Academy and its collectors misled, threatened, and harassed consumers; disclosed their debts to third parties; and deposited postdated checks early, in violation of federal law. This is the largest civil penalty the FTC has obtained in a debt collection case.
“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.”
According to a complaint filed by the Department of Justice on the FTC’s behalf, Academy collectors violated the FTC Act and the Fair Debt Collection Practices Act (FDCPA) while collecting debts, and Dickstein failed to stop the violations. The complaint also names Edward L. Hurt III and Albert S. Bastian, who oversaw Academy’s Las Vegas collection center and who are not part of the settlement with Academy and Dickstein.
The individual defendants allegedly participated in, or had the authority to control, Academy’s practices. Academy’s collectors allegedly engaged in false or deceptive threats of garnishment, arrest, and legal action; communication with third parties about consumers’ debts; and calls to consumers at their workplace when the employer prohibits such calls. Other practices included frequent, harassing, threatening, and abusive calls; unfair and unauthorized withdrawals from consumers’ bank accounts; and early deposit of postdated checks consumers submitted for debt payment.
More than 1,000 complaints against the company were filed with the FTC, various state attorneys general, the Nevada and Pennsylvania Better Business Bureaus, and the company itself. The FTC alleges that, without sufficient investigation, the defendants dismissed consumer complaints or did not properly discipline collectors, and that collectors who were terminated for FDCPA violations often returned to work within a few weeks or months.
Under the settlement, Academy and Dickstein will pay a $2.25 million civil penalty. The consent decree bars them from misrepresenting to consumers that nonpayment of a debt will result in the garnishment of wages, seizure or attachment of property, or lawsuits, or misrepresenting that Academy representatives are attorneys. The settling defendants are also prohibited from improperly communicating with third parties about a debt; using false, deceptive, or misleading representations in debt collection efforts; communicating with a consumer at any unusual time or place, including the workplace; or harassing, oppressing, or abusing any person in connection with debt collection. The settling defendants are also barred from making any withdrawals from consumers’ bank accounts without obtaining the consumers’ express informed consent, and they cannot deposit or threaten to deposit any postdated check or other postdated payment instrument prior to the date on the check or instrument.
In addition, the consent decree requires the settling defendants to clearly and conspicuously disclose to consumers that they may stop Academy from contacting them about the debt. They also must notify consumers that they may contact an Academy physical address, e-mail address, or toll-free phone number if they have a complaint about the way the company is collecting the debt.
By a 4-0 vote, the Commission authorized staff to refer the complaint and consent decree to the Department of Justice for filing in the U.S. District Court for the District of Nevada. The complaint and proposed consent decree were filed on November 14, 2008. The order was entered on November 18, 2008.
NOTE: The Commission issues 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 has actually violated the law. This Consent Decree with Academy and Dickstein is for settlement purposes only and does not constitute an admission by these defendants of a law violation. A consent decree is subject to court approval and has the force of law when signed by a judge.
The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.
- MEDIA CONTACT:
- Frank Dorman,
Office of Public Affairs
202-326-2674 - STAFF CONTACT:
- Leonard L. Gordon or Deborah A. Marrone,
FTC’s Northeast Region
212-607-2829
(FTC File No. 0623178)
(Academy Collection Services)
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Collection agencies from my expereince will break the law more often then not. If collection agencies see the debtor as a good target they will use less then professional tactics to try and collect. The best thing to do is put as many obsticles in there path as possible to let them know you are well armed and will pursue any shady collection efforts. One of the best things I have found as I refer to in my own blog is to send out letters for debt validation to the collection companies who are harassing you. These letters will stop them cold. If it looks like a collection agencie has and easy target for garnishment and bank account levies then they will pursue you diligently until they get what they want or see otherwise.
What Allan stated when it comes to sending out validation letters is crucial. I would like to add on to that. It’s imperative that someone sends out a validation letter, but it’s even more important to understand what validation means. A collector will send out anything they want and call it validation. Honestly validation doesn’t stop them cold. Many times they just ignore you. In fact, some will ignore and then sue. Collectors can and sometimes will sue hoping it will scare you into paying or you will ignore the court summons so they win by default.
Make sure you know the law well so you can tackle these collectors, because they try everything they can with you.