United States - FTC Brings First Case Alleging Text Messages Were Used In Illegal Debt Collection Scheme

A California-based debt collector will pay $1 million dollars to settle Federal Trade Commission charges for deceptive debt collection and other violations. This is the first FTC action against a debt collector who used text messaging to attempt to collect debts in an unlawful manner. The FTC alleged that the defendants used English- and Spanish-language text messages and phone calls in which they unlawfully failed to disclose that they were debt collectors and falsely represented that they were attorneys who could sue consumers for not paying their debts or to garnish their wages. The defendants were charged with violating both the Fair Debt Collection Practices Act and the FTC Act. In addition to the $1 million civil penalty, the settlement requires the defendants to stop sending text messages that do not include disclosures required by law, and to obtain a consumer’s express consent before contacting them by text message. The defendants also are barred from falsely claiming to be law firms, and from falsely threatening to sue or take any action – such as seizure of property or garnishment – that they do not actually intend to take.