Debt Buyer/Debt Collection Companies and Their Principals Settle FTC Charges

Companies that the Federal Trade Commission alleges have threatened and harassed thousands of consumers to get them to pay old, unenforceable debts or debts they did not owe have agreed to settle charges that their abusive and deceptive collection practices violated federal law. The settlement prohibits the companies’ alleged abusive debt collection practices in the future, require disclosures to consumers of their rights in the companies’ collection notices and communications with consumers, and requires the companies and their principals to pay a $300,000 civil penalty.

The FTC charged that Capital Acquisitions and Management Corp. (CAMCO), its subsidiary, RM Financial Services, Inc., and four principals, engaged in systematic and widespread violations of the Fair Debt Collection Practices Act (FDCPA). The FTC charges that the principals of the companies were directly involved in the alleged law violations.

CAMCO is a “debt buyer” – a company that buys old debts well past the statute of limitations and attempts to collect them. Most of the debts are unenforceable in court and are also so old that they are beyond the reporting periods allowed under the Fair Credit Reporting Act. Some of the debts CAMCO allegedly attempted to collect were already discharged in bankruptcy or had been paid. The FTC charged that in their attempt to collect these debts, the companies engaged in abusive and deceptive collection practices, including:

• Harassing consumers at their workplaces;
• Discussing consumers’ debts with third parties;
• Continuing to communicate with consumers after consumers had notified them that they did not owe the money and did not wish to be contacted again;
• Using obscene or profane language;
• Calling consumers continuously with the intention of annoying and abusing them;
• Falsely representing the amount and legal status of the debts;
• Misrepresenting themselves as attorneys;
• Threatening imprisonment, seizure, garnishment, attachment or sale of property or wages with full knowledge that such action could not legally be taken;
• Threatening to take action that could not be legally taken, including threatening to disclose the debts to consumers’ employers and threatening to report the debt to consumer reporting agencies even though the debts are past the credit reporting periods; and
• Ignoring consumers disputes of the charges and continuing to harass them after consumers requested verification of the debts.

The settlement with CAMCO, RM Financial, Reese Waugh, Jerome Kuebler, Scott R. Franson, and Mario Bianchi prohibits these deceptive and illegal practices. It further requires the defendants to pay a civil penalty in the amount of $300,000. It requires that all written collection materials sent to consumers contain disclosures about consumers’ rights under the FDCPA, provide an address and phone number consumers can use to contact the companies, disclose that the FTC enforces the FDCPA, and disclose ways to contact the FTC. It also contains certain recordkeeping and bookkeeping requirements to allow the FTC to monitor compliance.

“The Commission is accepting this settlement,” said Chairman Timothy J. Muris, “because there is ample evidence of the defendants’ liability. We are reviewing our civil penalty program to determine whether the overall range is appropriate. As part of this review, we will give additional scrutiny to the level of civil penalties in the future.”

The Commission vote to refer the complaint and consent decree to the Department of Justice for filing was 5-0.

The complaint and consent decree were filed on March 24 in the U.S. District Court for the Northern District of Illinois, in Rockford, by the United States Attorney and the Department of Justice at the request of the FTC. The consent decree was entered by Judge Phillip G. Reinhard.

NOTE: This consent decree is for settlement purposes only and does not constitute an admission by the defendant of a law violation. A consent decree has the force of law when signed by the judge.

Copies of the complaint and consent agreement are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1 877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC File No. 022 3222)
(Civil Action No. 04 C 50147)