The voice-mail message was angry and unrelenting.
“The situation will not die, I guarantee you!” the woman said in a steely voice, adding that she would call “every day.”
It was not a stalker or a jilted lover.
It was a debt collection company.
And it was illegal harassment, according to the Federal Trade Commission, because the caller went on to threaten that the person’s wages would be seized.
Last week, the commission announced that LTD Financial Services, a major collection agency, agreed to pay $1.375 million to settle charges that it misled and threatened consumers several times in violation of federal laws.
Houston-based LTD, which handles about 1.25 million consumer accounts a year, didn’t admit any wrongdoing.
The amount of the settlement was extraordinarily high considering that the government charges against LTD -- backed by evidence such as that answering-machine message recorded by a consumer -- concerned only the company’s tactics.
“We are not saying the people they called didn’t owe the money,” but the methods used violated the law, said Thomas Carter, senior legal council for the FTC’s Southwest region in Dallas. As a result, all of the money amounts to penalty, not restitution.
“This is a precedent-setting case,” Carter said, sparked by nearly 1,500 complaints to the agency about LTD’s tactics. “It sends a strong message to the debt collection industry: You can’t turn a blind eye to this kind of stuff.”
LTD executives declined to be interviewed but issued a statement saying the company cooperated with the FTC investigation since it was first contacted by the agency more than two years ago. The firm settled, the statement said, “at the advice of legal council and in order to avoid costly litigation.”
The company said it had improved employee training and installed consumer complaint call-in lines to address any problems but remained puzzled about why it had been targeted because the number of complaints to the FTC had declined. However, the company didn’t address the substance of the complaints.
But if LTD officials expected their collection brethren to rally behind them, they were wrong.
“No one likes to have a bad apple in the industry,” said Jan Stieger, executive director of the California Assn. of Collectors. The group, established in 1917, is the oldest debt collection trade group in the country.
“The profession has come a long way,” Stieger said. “It’s now made up of professionals who collect a lot of debt in an appropriate manner.”
That doesn’t make them any more beloved.
But debt collectors’ actions are governed by law, most prominently the federal Fair Debt Collection Practices Act enacted in 1977 and since then amended several times. They don’t have to say “please,” but they can’t make groundless threats, as alleged by the FTC in the LTD charges.
“It was a fairly common practice,” Carter said, “for them to tell consumers that they would have their wages garnished.”
He was not speaking about sprigs of parsley on a Thanksgiving platter. A garnishment is a legal means of having a person’s wages siphoned off to pay a debt.
That’s not an easy process. Usually, a court judgment has to be rendered before the wages can be set aside. LTD did not, the FTC found, back up its often-made threats of garnishments with legal action.
“It’s a violation of the [law] to mislead people to believe that their wages are going to be garnished when they are not,” Carter said.
Likewise, a debt collector can’t threaten to sue or put a lien on a consumer’s property unless it intends to do just that.
Another tactic, according to the LTD charges, was to tattle on the person who owed the debt.
“That’s a pretty powerful, deceptive tool if people believe their employer will find out,” Carter said.
It’s a particularly potent tactic when dealing with debtors in the military. Careers can be severely damaged if commanding officers find that their personnel have debts that have gone to third-party collectors.
But under most circumstances collection agencies can’t, under the law, communicate with anyone about a debt except the person who supposedly owes it and his or her attorney.
After all, the debt might not be legitimate. Among the nearly 200 complaints about LTD received by the Better Business Bureau in Houston was one by a man who said he explained to a caller from the collector that he had been a victim of identity theft.
He said he planned to officially protest the supposed debt after he received a written notice from the collector, according to the complaint.
Still, the caller demanded a payment by a certain date and when the consumer refused, the caller said, “This is why you’re in debt and I’m not,” before hanging up.
There’s nothing in the law prohibiting run-of-the-mill insults. (Profanity is banned, however.)
Consumers have 30 days after the receipt of a written notice from a debt collection agency to file an official objection.
After that letter is received by a collection agency, it is banned from calling again unless it can produce proof that the person indeed owes the money.
There are other protections for consumers. A debt collector can’t call a person’s place of employment if it is clear that could cause problems for the debtor.
The collector can’t repeatedly place calls, one after another, to a household.
And if you ask a debt collection agency, in writing, to stop calling you, it has to do so. You don’t even have to give a reason.
There are two exceptions to this rule. The agency could call to say it won’t be calling anymore. Or the agency could call to say that a specific action will be taken against you -- as long as it’s not an empty threat.
All these protections against abuse don’t make a legitimate debt go away.
This is why none of the money in the LTD settlement will go to consumers.
“When consumers pay money they don’t owe, we get it back to them,” Carter said. “But in this case, the money goes to the federal Treasury.”
“It’s not right,” he said, “that they get to keep the money they got as a result of violating the law.”
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In your debt
Here are some of the don’ts for debt collection agencies, under the law.
* The agency can’t call you before 8 a.m. or after 9 p.m., unless you agree to it.
* The agency can’t call you at work if it’s clear that will put you in an uncomfortable position.
* Idle threats to seize wages are not permitted.
* The agency can’t tell your boss or anyone else but your attorney that you have a debt.
* A debt collection caller can’t use profanity.
* Repeated calls, one right after another, are not allowed.
* An agency has to stop calling if you tell it to do so in writing, but that doesn’t make a debt go away.
Source: Federal Trade Commission