November 4, 2015

Newly Announced FTC "Operation Collection Protection" Targets Debt Collectors

Holland & Knight Alert
Anthony E. DiResta | Kwamina Thomas Williford | Brian J. Goodrich

The Federal Trade Commission (FTC) announced today a major law enforcement initiative targeting deceptive and abusive debt collection practices. "Operation Collection Protection" is a nationwide initiative that the FTC is coordinating with the Department of Justice (DOJ) and Consumer Financial Protection Bureau (CFPB), as well as more than 45 state and local enforcement agencies and regulators.

Aggressive Debt Collection Tactics Spur Action

FTC Chairwoman Edith Ramirez explained that Operation Collection Protection will conduct a comprehensive review of debt collection industry practices and will target corporate entities as well as individuals. The industry-wide sweep is intended to combat the increase of deceptive and abusive behavior mainly reported in connection with "phantom" or "zombie" debts. Phantom and zombie debts are debts that consumer do not owe, often because the consumer has already paid off the debt or did not owe the debt in the first place.

Chairwoman Ramirez conveyed that state and federal regulators have received an increased number of complaints from consumers who reported receiving calls from unlicensed, aggressive debt collectors demanding that they pay their debts. These callers, or "debt scammers," allegedly purchase consumers' personal information, including consumers' Social Security numbers, home addresses and phone numbers, and employment information. The callers then use deceptive and abusive tactics to collect the debt, including disguising their identities, threatening consumers with lawsuits, telling consumers they will be arrested and telling consumers they will show up at their places of employment.

Operation to be a Nationally Coordinated Effort

Chairwoman Ramirez announced the initiative at a press conference side-by-side with Illinois Attorney General Lisa Madigan and Minnesota Commerce Department Commissioner Mike Rothman. Chairwoman Ramirez said she recognized that debt collection plays an important role in the U.S. credit system, but explained that debt collection is the No. 1 source of complaints that the agency receives each year. In the words of Commissioner Rothman, the message to bad actors within the debt collection industry is clear: "Clean up your act."   

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.

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