January 30, 2012
One of the nation's biggest debt buyers has agreed to pay a $2.5 million penalty to settle Federal Trade Commission charges that it repeatedly mislead consumers as it tried to collect debts.
As part of the settlement announced today, Asset Acceptance LLC will have to tell consumers if a debt the company is trying to collect is time-barred, meaning that the debt is too old to sue over.
That's a huge pro-consumer provision, according to Cleveland consumer attorney Ed Icove, because under the laws of Ohio and many other states, time-barred debts can be revived – meaning the clock on being able to sue gets reset – if a consumer unwittingly makes even a small payment on the debt.
Under the settlement, once Asset Acceptance tells a consumer that a debt is time-barred, it cannot sue, even if a consumer subsequently makes a payment.
Asset Acceptance LLC buys old debts from companies ranging from gyms to banks for pennies on the dollar and then tries to collect. The company is a subsidiary of Michigan-based Asset Acceptance Capital Corp.
Because Asset purchased old debts, the FTC said, many of the files came with scant information about the debts or the whereabouts or identities of the consumers. Asset dug up new information, including addresses and Social Security numbers, to track down consumers. But the FTC said the company failed to investigate when consumers told the company they weren't the people Asset was looking for.
Although Asset mailed required debt collection notices to consumers, the suit said, it didn't remail them if the envelopes were returned as undeliverable.
Some consumers only found out about the collection attempt when they discovered negative information on their credit reports. Many, the suit said, had no idea who Asset was or what the alleged debt was for.
Credit reporting bureaus sent Asset more than a half-million disputes by consumers in 2008 and 2009. But in many cases, the suit said, Asset's investigation of the disputes consisted of little more than matching the consumer's Social Security number in Asset's file to the Social Security number on the consumer's credit report.
In many cases, the suit said, that number matched because Asset was the party that assigned the Social Security number to the debtor's file.
Similarly, when consumers responded to Asset's debt collection notices by demanding validation of the debt, the suit said, the company didn't go back to the original creditor for more information. Instead it sent back a brief description of the information it purchased from the original creditor and then immediately resumed efforts to collect.
Asset said in a statement that it had settled the case without admitting any wrongdoing, adding that many of its practices had changed since the investigation started in 2006.
As part of the settlement, the company must put collection efforts on hold while it investigates disputes from consumers.
David Vladeck, who heads the FTC's consumer protection bureau, said consumers often don't know the law on time-barred debts, but that having a collector contact them about the debt could give a misleading impression that they could be sued if they fail to pay.
How long it takes debts to become time-barred varies not only from state to state, but also on the type of debt. Collectors are permitted to ask consumers to pay unpaid debts, even time-barred debts, but they can't say or imply they can sue to collect.
Under the settlement, Asset is prohibited from selling time-barred debts to other collection companies after it warns consumers it can't sue to collect. It's also prohibited from selling disputed debts to other collectors.
"This FTC settlement signals that, even with old debt, the prohibitions against deceptive and unfair collection methods apply," Vladeck said in a statement. Icove, whose public interest law firm often sues debt collection firms, said the settlement stops short of declaring it a deceptive practice to fail to tell a consumer that a debt is time-barred.
But he said that the issue is one the new Consumer Financial Protection Bureau could consider in rule-making.
Asset announced the closing of its Cleveland office in December 2010.
http://www.cleveland.com/consumeraff..._25_milli.html
One of the nation's biggest debt buyers has agreed to pay a $2.5 million penalty to settle Federal Trade Commission charges that it repeatedly mislead consumers as it tried to collect debts.
As part of the settlement announced today, Asset Acceptance LLC will have to tell consumers if a debt the company is trying to collect is time-barred, meaning that the debt is too old to sue over.
That's a huge pro-consumer provision, according to Cleveland consumer attorney Ed Icove, because under the laws of Ohio and many other states, time-barred debts can be revived – meaning the clock on being able to sue gets reset – if a consumer unwittingly makes even a small payment on the debt.
Under the settlement, once Asset Acceptance tells a consumer that a debt is time-barred, it cannot sue, even if a consumer subsequently makes a payment.
Asset Acceptance LLC buys old debts from companies ranging from gyms to banks for pennies on the dollar and then tries to collect. The company is a subsidiary of Michigan-based Asset Acceptance Capital Corp.
Because Asset purchased old debts, the FTC said, many of the files came with scant information about the debts or the whereabouts or identities of the consumers. Asset dug up new information, including addresses and Social Security numbers, to track down consumers. But the FTC said the company failed to investigate when consumers told the company they weren't the people Asset was looking for.
Although Asset mailed required debt collection notices to consumers, the suit said, it didn't remail them if the envelopes were returned as undeliverable.
Some consumers only found out about the collection attempt when they discovered negative information on their credit reports. Many, the suit said, had no idea who Asset was or what the alleged debt was for.
Credit reporting bureaus sent Asset more than a half-million disputes by consumers in 2008 and 2009. But in many cases, the suit said, Asset's investigation of the disputes consisted of little more than matching the consumer's Social Security number in Asset's file to the Social Security number on the consumer's credit report.
In many cases, the suit said, that number matched because Asset was the party that assigned the Social Security number to the debtor's file.
Similarly, when consumers responded to Asset's debt collection notices by demanding validation of the debt, the suit said, the company didn't go back to the original creditor for more information. Instead it sent back a brief description of the information it purchased from the original creditor and then immediately resumed efforts to collect.
Asset said in a statement that it had settled the case without admitting any wrongdoing, adding that many of its practices had changed since the investigation started in 2006.
As part of the settlement, the company must put collection efforts on hold while it investigates disputes from consumers.
David Vladeck, who heads the FTC's consumer protection bureau, said consumers often don't know the law on time-barred debts, but that having a collector contact them about the debt could give a misleading impression that they could be sued if they fail to pay.
How long it takes debts to become time-barred varies not only from state to state, but also on the type of debt. Collectors are permitted to ask consumers to pay unpaid debts, even time-barred debts, but they can't say or imply they can sue to collect.
Under the settlement, Asset is prohibited from selling time-barred debts to other collection companies after it warns consumers it can't sue to collect. It's also prohibited from selling disputed debts to other collectors.
"This FTC settlement signals that, even with old debt, the prohibitions against deceptive and unfair collection methods apply," Vladeck said in a statement. Icove, whose public interest law firm often sues debt collection firms, said the settlement stops short of declaring it a deceptive practice to fail to tell a consumer that a debt is time-barred.
But he said that the issue is one the new Consumer Financial Protection Bureau could consider in rule-making.
Asset announced the closing of its Cleveland office in December 2010.
http://www.cleveland.com/consumeraff..._25_milli.html
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