FTC v. Federal Check Processing, Inc., ___F.3d ___(2nd Cir. 2019)
The US Court of Appeals for the Second Circuit held that Individual Owners Of Debt Collector Companies Personally Liable For Companies’ FDCPA And FTCA Violations
The Second Circuit recently held that it was proper to find two individual co-owners and co-directors of several corporate debt collector entities personally liable for $10,852,396 after such entities violated the Federal Trade Commission Act (FTCA) and the Federal Fair Debt Collection Practices Act (FDCPA). In FTC v. Federal Check Processing, Inc., the FTC brought suit against thirteen corporate debt collector entities and the two co-owners and co-directors of such entities, alleging that the defendants’ combined debt collection practices violated the FDCPA and FTCA. The corporate defendants’ business consisted primarily of collecting payday loan debts, which they bought from consumer-debt creditors and compiled into debt portfolios. On summary judgement, the U.S. District Court for the Western District of New York found that the corporate defendants directed nearly all of their approximately twenty‐five employee‐debt collectors to routinely contact debtors by telephone and falsely identify themselves as ʺprocessors,ʺ ʺofficers,ʺ or ʺinvestigatorsʺ from a ʺfraud unitʺ or ʺfraud division,ʺ then accuse debtors of check fraud or a related crime and threaten them with criminal prosecution if they did not pay their debts. Moreover, on certain occasions, the collectors called friends, family members, employers, or co‐workers of debtors, informing them that the debtors owed a debt, had committed a crime in failing to pay it, and faced possible legal repercussions. If debtors or other interested parties sought further information about the debt, the collectors typically refused to provide such information. [As reported in Credit & Collection e-newsletter on 2/4/19]