The Federal Trade Commission (“FTC”) announced yesterday that the debt collection agency Expert Global Solutions, Inc. and its subsidiaries (collectively, “EGSI”) will pay $3.2 million to settle an action commenced by the FTC only two days ago. The FTC reports that the settlement is the largest it has ever obtained.
The FTC’s Complaint
On July 8, 2013, the FTC commenced an action against EGSI in the United States District Court for the Northern District of Texas. The complaint alleges violations by EGSI of both the Federal Trade Commission Act (“FTC Act”) and the Fair Debt Collection Practices Act (“FDCPA). Among other things, the complaint alleges that EGSI continued to call consumers who already represented to EGSI that the debt was invalid, and falsely claiming that EGSI had verified the debt and that such debt was indeed owed. These claims by ESGI were allegedly false because ESGI telephone representatives did not have a reasonable basis to believe the underlying debts were owed. Additionally, the complaint alleges that EGSI telephone representatives falsely assured consumers that EGSI would take steps to prevent the placement of further debt collection calls to the consumer’s telephone number. These acts, if they occurred, violate the FTC Act.
In addition, the complaint alleges that EGSI telephone representatives placed multiple telephone calls to third-parties in an attempt to obtain the location of the consumer/alleged debtor despite previous refusals by those same third parties to supply such information. Moreover, EGSI is alleged to have placed debt collection calls to consumers at a time or place known by EGSI to be inconvenient to the consumers. The complaint also alleges that despite being notified by consumers in writing to stop placing calls to their telephones, or of the consumers’ intent not to pay their respective debts, EGSI would nevertheless continue to place multiple calls to those consumers. All of these actions, if they occurred, violate the FDCPA.
The Proposed Consent Decree
The terms of the consent decree have not been disclosed in full. However, the consent decree imposes numerous conditions on EGSI above and beyond its agreement to pay $3.2 million to the FTC. Pursuant to the proposed settlement order, whenever a consumer disputes the validity or amount of the alleged debt, EGSI must either end or suspend collection efforts until EGSI representatives conduct a “reasonable investigation” to verify the debt. The proposed settlement also restricts when EGSI may leave voicemail messages for consumers that disclose the alleged debtor’s name and the fact that he or she may owe a debt.
The consent decree requires EGSI to end all of its practices that violate the FTC Act and the FDCPA. In addition, EGSI will be required to record at least 75% of all its debt collection calls beginning 1 year after the date the settlement is approved by the Court, and retain those recordings for 90 days after they are made.