Debt Collectors Settle with FTC; Abusive Practices Affected Consumers Nationwide

The operators of a debt collection company that used false threats and other unlawful tactics to collect consumers’ debts have agreed to settle Federal Trade Commission charges that they violated federal law. The settlements bar future violations and require the defendants to pay $225,000.

According to the FTC complaint, the defendants, who had about three million consumer accounts and collected debts in every state, falsely threatened that nonpayment of debt would result in garnishment of consumers’ wages, arrest, or legal action. The FTC alleged that the defendants used illegal and abusive debt collection methods: they called consumers before 8 a.m. or after 9 p.m.; called their workplace when the collectors knew or had reason to know that the calls were inconvenient; told employers, co-workers, relatives, and neighbors about the consumers’ debts; continued calling after receiving consumers’ written demands to stop; and used harassing and abusive tactics such as calling many times a day, calling right back after a consumer hung up, and using profane or other abusive language.

Consumers filed hundreds of complaints with the FTC, the Metropolitan New York Better Business Bureau, various state attorneys general, and the defendants, according to the complaint. The defendants often failed to address the law violations alleged in the complaints and often dismissed complaints without significant investigation or disciplinary action against employees. Even in the face of substantial evidence of debt collection violations, the defendants’ collectors often went unpunished or merely received a warning, the complaint stated.

The settlements prohibit the defendants from further violations of the FTC Act and the Fair Debt Collection Practices Act. The settlement with Oxford Collection Agency, Inc., doing business as Oxford Management Services; Richard Pinto; Peter Pinto; and Charles Harris imposes a civil penalty of $1,060,000, all but $225,000 of which will be suspended. The settlement with Salvatore Spinelli, individually, and d/b/a Salvatore Spinelli, Esq., Attorney-at-Law, also imposes a $1,060,000 civil penalty, which will be suspended based on his inability to pay. The full judgments will become due immediately if the defendants are found to have misrepresented their financial condition. The settlements also contain record-keeping and reporting provisions to allow the FTC to monitor compliance with the orders.

The Commission approved the consent decrees by a vote of 4-0. The complaint and consent decrees were entered by the U.S. District Court for the Eastern District of New York on June 23, 2009 (Case No. 2:09-cv-02467-LDW-AKT).

NOTE: The Commission issues a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public
interest. The complaint is not a finding or ruling that the defendants have actually violated the law. Stipulated final orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the judge.