Debt Collection Agency Fined $2.25 million by FTC for FDCPA Violations
PHILADELPHIA, PENNSYLVANIA -- A collection agency based in Philadelphia and its owner have agreed to pay a $2.25 million civil penalty to settle an investigation by the Federal Trade Commission over a laundry list of Fair Debt Collection Practices Act (FDCPA) violations and other unfair business practices.
The FTC announced the settlement Friday. The government agency noted that it is the largest civil penalty the FTC has received for a debt collection case.
Academy Collection Service, Inc. and owner Keith Dickstein agreed to the penalty to settle charges that the company and its collectors misled, threatened, and harassed consumers; disclosed their debts to third parties; and deposited postdated checks early, in violation of federal law. Dickstein was cited for not stopping the violations.
The FTC said in a statement that more than 1,000 complaints were filed against Academy with the FTC, various state attorneys general, the Nevada and Pennsylvania Better Business Bureaus, and the company itself, prompting an investigation. During the investigation, the FTC determined that Academy often ignored consumer complaints.
“These defendants are responsible for their debt collectors’ abusive practices,” said Lydia Parnes, Director of the FTC’s Bureau of Consumer Protection, in a statement. “They ignored people's complaints and rewarded the collectors who broke the law. This is not a business model that the FTC tolerates.”
Two other Academy officers, Edward L. Hurt III and Albert S. Bastian, were also named in the complaint, but did not participate in the settlement.
According to the FTC, Bastian and Hurt led Academy’s Las Vegas collection operation. Leonard Gordon, director of the FTC’s Northeast Regional Office – the office that filed the complaint – told insideARM that the FTC “was not able to reach a settlement with Bastian and Hurt.” The suits against the men are ongoing.
“The Las Vegas office was clearly the nexus for a lot of the [violating] activity,” said Gordon. “And these two men ran that office.”
In addition to the monetary penalty, Academy agreed to alter many of its business practices and refrain from certain activities such as misrepresenting debts to consumers, improperly communicating with third parties about a debt; using false, deceptive, or misleading representations in debt collection efforts; communicating with a consumer at any unusual time or place, including the workplace; or harassing, oppressing, or abusing any person in connection with debt collection.
Gordon noted that Academy “appeared to be making steps to correct their business practices.”
Calls to Academy were not returned.
by Patrick Lunsford
November 24, 2008