Two Glendale-based debt collection agencies have reportedly agreed to pay $1 million to the Federal Trade Commission for allegedly falsely posing as law firms and using text messages to threaten legal action against borrowers for unpaid debt.
The federal agency announced this week it had reached a settlement with Archie Donovan, who owns National Attorney Collection Services, Inc., and National Attorney Services LLC. Neither business is a law firm, according to the federal agency.
A U.S. District Court judge must sign off on the final order.
Donovan reportedly also agreed to stop sending text messages without disclosing who is sending them. His companies must not send text messages to borrowers without first receiving consent from them to do so, according to the commission.
Calls to Donovan’s attorney were not returned.
The commission’s case against Donovan is the first legal action it’s taken against a debt collector who reportedly used text messages illegally.
Company representatives reportedly sent text messages and called borrowers without identifying themselves as debt collectors.
They made more than 100,000 calls and sent 100,000 text messages in a span of 18 months, said Betsy Lordan, a commission spokeswoman.
They pretended to be from law firms and threatened to garnish wages, arrest or sue borrowers for unpaid debt, according to the federal agency.
They also mailed envelopes that displayed a large arm shaking money from a consumer who is hanging upside down, according to the federal agency. Mailed envelopes must not suggest a consumer owes debt.
Donovan’s companies, with addresses on Brand Boulevard and Jackson Street, reportedly disclosed debts to the consumers’ friends, family members and co-workers, which is illegal because it could jeopardize their reputation or job.
Donovan’s companies were collecting debts for payday-loan companies and retailers that served Spanish-speaking consumers, Lordan said.