A Glendale collection agency has agreed to pay $1 million to resolve a lawsuit accusing it of sending unlawful text messages to debtors and inappropriately disclosing the debts to their family, friends and co-workers.
The Federal Trade Commission had accused National Attorney Collection Services Inc. of falsely portraying itself as a law firm in texts, telephone calls and by mail. In some cases, the FTC lawsuit said, the company falsely threatened to have debtors arrested.
The FTC also accused the company and its chief executive, Archie Donovan, of illegally revealing debts to consumers’ family members, friends and co-workers. In some cases, they sent notices about the debts in mailing envelopes that included a picture of a large arm shaking money from a consumer who is strung upside down. U.S. law does not allow debt collectors to publicly disclose someone’s private debts, because doing so could endanger their jobs and reputations, the FTC said.
Many of the debtors had fallen behind on payments to payday loan companies, which often charge exorbitant interest rates to borrowers with poor credit histories, the FTC said in its lawsuit, filed at U.S. District Court in Los Angeles.