On January 20, 2015, the Department of Justice, on the Federal Trade Commission’s behalf, filed a complaint against Commercial Recovery Systems, Inc. (CRS), a Texas-based debt collector, including its current and former principals, for allegedly using illegal tactics, such as threatening consumers with false claims of lawsuits and potential garnishments, in the United States District Court for the Eastern District of Texas.   Specifically, the FTC alleges that CRS, its president, Timothy Ford, and its former vice president, David Devany, violated the Federal Trade Commission Act and the Fair Debt Collection Practices Act by using deceptive collection methods to collect debts from consumers.  As a result, the FTC is seeking an injunction to stop CRS’s allegedly illegal conduct and certain civil penalties.

According to the complaint, since at least 1994, CRS engaged in consumer debt collection activities nationwide, including for auto loans and credit card debts.  As part of these collection activities, CRS contacted consumers by telephone and regular mail.   Despite engaging in debt collection activities since 1994, the complaint alleges that since at least 2010, CRS, under the supervision Ford and Devany, relied on deceptive collection tactics to convince consumers to pay a debt that CRS claims they owed.  These alleged coercive and deceptive tactics included: (i) telling consumers that they must pay an alleged debt or else a debt collection lawsuit will be filed against them; (ii) telling consumers that a debt collection lawsuit has been filed against them; (iii) directing the representatives of CRS to claim or imply that they are an attorney or calling on behalf of an attorney; and (iv) directing the representatives of CRS to claim or imply that they are actual calling from the “court system” or are a court employee.

As part of the FTC’s announcement of this lawsuit filing, Jessica Rich, director of the Federal Trade Commission’s Bureau of Consumer Protection, stated, “[w]hen it comes to debt collection, people have rights . . . [and] [i]t’s illegal to harass people, or to make false threats about wage garnishment or lawsuits.  Unfortunately, these unscrupulous debt collectors systematically lied to the people they called.”

The takeaway from the FTC’s case filing in U.S. v. Commercial Recovery Systems, Inc.:  the FTC is focused on protecting consumers from illegal and coercive debt collection tactics and will respond to consumer complaints swiftly and accordingly.