FTC Announces $2.8 million Settlement with Major Debt Collector

The Federal Trade Commission announced Wednesday that West Asset Management (WAM) had agreed to pay a $2.8 million civil penalty to settle charges that some of its debt collection practices ran afoul of federal law.

The FTC alleged that WAM violated the FTC Act as well as the Fair Debt Collection Practices Act (FDCPA). The Commission also noted that the $2.8 million penalty was the largest it had ever obtained in a debt collection-related case.

According to the FTC’s complaint (Full FTC Complaint (PDF), the regulator had received thousands of consumer complaints against WAM related to aggressive debt collection tactics. While the FTC cited a large range of questionable practices and potential FDCPA violations, the complaint seemed to highlight the alleged tactic of WAM collectors misrepresenting themselves as attorneys or threatening legal action when there was no intention to follow through.

The FTC noted that WAM, a division of teleservices giant West Corp., is one of the larger ARM firms in the U.S., employing 1,500 debt collectors in 13 states and in one location overseas.

The settlement calls for WAM to pay a $2.8 million civil penalty and amend its practices , including the permanent prohibition of tactics including:

• Misrepresenting itself as a law firm or that its collectors are attorneys;
• Misrepresenting that debtors will be arrested or have their property seized if they don’t pay;
• Threatening actions that would be illegal, or actions that the company has no intention of taking;
• Making false statements to collect a debt or obtain information about a consumer;
• Withdrawing funds from consumers’ bank accounts or charging their credit cards without their consent;
• Depositing postdated checks before the date on the check, or threatening to do so;
• Revealing to third parties that a consumer owes a debt;

In a statement released to insideARM.com, WAM noted that it agreed to the settlement due to the soaring costs of defending itself against the allegations.

“West is pleased to have this matter resolved so that it can turn its full attention and resources back to running the business and serving our clients,” said Greg Hogenmiller, WAM’s VP and Deputy General Counsel. “West continues to invest heavily in its compliance programs and believes that it is among the best in the industry in that regard. We look forward to continuing to provide services that our employees and clients can be proud of. In regard to the threatened action by the FTC, West continues to believe that it could have successfully defended the claims, but the costs associated with mounting such a defense over an extended period of time were simply too high.”