On Wednesday, November 4, the Federal Trade Commission announced the largest-ever-coordinated federal-state enforcement initiative targeting allegedly deceptive and abusive debt collection practices. The initiative, consisting of 30 enforcement actions by federal, state, and local authorities, targets debt collectors who utilize harassing phone calls and false threats of litigation, arrest, and wage garnishment. The FTC is also cracking down on attempts to collect so-called “phantom debts” (fake debts that are not actually owed) and on debt collectors who fail to provide consumers legally required disclosures and notices or who fail to comply with state and local licensing requirements.
The FTC’s initiative, named “Operation Collection Protection,” brings to 115 the number of enforcement actions filed against debt collectors this year. Enforcement actions frequently seek both injunctive relief and damages, including statutory damages, punitive damages, and attorney fee awards. Settlements in these cases often require the payment of millions of dollars in damages and require the company to submit to monitoring agreements, and can include provisions banning defendants from working in the debt collection industry. Companies operating in this space should consider reviewing and, if necessary, updating their compliance programs in light of this enforcement initiative.