The FTC’s First Text Messaging Case- $1 Million Settlement!

On September 25th, the Federal Trade Commission (“FTC”) advised that a debt collector agreed to pay a $1 million civil penalty to settle FTC allegations that collectors communicated improperly through the use of text messages. This is the first action that the FTC has brought against a debt collector who attempted to collect debts in an unlawful manner by using text messages among other means. The FTC alleged that Archie Donovan, as well as National Attorney Collection Services, Inc., and National Attorney Services LLC- the towing companies Donovan controls- committed various violations of the Fair Debt Collection Practices Act, 15 U.S.C. 1692 et seq (“FDCPA”). Specifically, the FTC argued that the collectors illegally contacted consumers using text messages and phone calls by failing to disclose that their status as debt collectors in violation of §1692(e)(11). Another interesting allegation by the FTC was the use of a certain stamp by Donovan and his companies. They purportedly used mailing envelopes that picture a large arm holding a consumer upside down by his legs and shaking money from him.  The FTC asserted that this violated §1692(f)(a), which prohibits the use of “any language or symbol, other than the debt collector’s address, on [an] envelope” communicated to a consumer as it disclosed the senders status as a debt collector to the public.

In addition to the $1 million in civil penalties, the settlement terms provide that the collectors are barred from communicating with consumers without disclosing their identity as debt collectors, falsely claiming to be law firms, and threatening to seize consumer’s property or garnish their wages.  Further, Donovan and his companies agreed to obtain consumers’ consent before sending text messages in the future.

The FTC has addressed how debt collectors can use text messages to collect debts in a lawful manner while maintaining consumers’ privacy.  You can find this information in FTC’s workshop and report.

To see the complaint:

http://www.ftc.gov/os/caselist/1223032/130925naccmpt.pdf