FTC penalizes world's largest debt collector

Company fined $3.2 million for ignoring debtors' denials

The world's largest debt collection company will pay a $3.2 million penalty -- the largest civil penalty levied against a third-party debt collector -- for calling consumers repeatedly and ignoring their denials of owing the debts, the Federal Trade Commission announced July 9.

Expert Global Solutions, the corporate successor of NCO Group, and its debt collection units also agreed to halt their harassing tactics, the consumer protection agency said.

A complaint filed by the U.S. Justice Department said the companies called consumers multiple times a day, ignored demands to stop calling and failed to verify debts after consumers denied owning them.

The companies also contacted people at work and called other people about the debt, outside the bounds of collection law, the government charged. The companies neither admitted nor denied the accusations.

"If this is the largest [penalty] it should send a message to the rest of the industry," said Ed Mierzwinski, consumer program director at U.S. PIRG, a policy advocate for consumer rights.

It is a message that NCO or its units have received before.  In 2012, NCO Financial Systems entered a $950,000 settlement with 19 states over collecting amounts that consumers did not owe. NCO Financial Systems entered a $300,000 settlement with the state of Pennsylvania in 2006 after being accused of using false and deceptive collection practices. In 2004, the FTC announced that NCO Group paid $1.5 million to settle charges it provided faulty information to credit bureaus about consumers' payments.

The latest complaint names Expert Global Solutions and units NCO Financial Systems, ALW Sourcing LLC and Transworld Systems Inc., which also does business as North Shore Agency Inc.

Officers and attorneys for Expert Global Solutions and NCO were unavailable. Expert Global Solutions, based in Plano, Texas, describes itself as the holding company for NCO on the corporate website.

Expert Global Systems and its units are the world's largest debt collection company, according to an FTC news release, with 32,000 workers and revenue of more than $1.2 billion in 2011. The company has offices in Canada, Barbados, India, the Philippines and Panama, as well as the U.S.

The company is also the target of the most complaints about debt collection that the FTC receives, spokeswoman Betsy Lordan said in an email response to questions. The proposed settlement faces approval by the U.S. District Court for the Northern District of Texas. Court action is expected within about three weeks, Lordan said.

Website InsideARM.com reported that NCO provided  a statement describing the action as a "legacy issue" dating back to 2008. The company said it has already addressed the FTC's concerns, according to the statement quoted by the website.

Under the proposed order, the companies are restricted from leaving voice mail messages unless the answering machine identifies the person by name as the debtor. They must also be able to substantiate claims that a consumer owes a debt before dunning them. If a consumer denies a debt, the companies must verify the debt or drop collection attempts and not sell or transfer the account.

"Consumers should pay their debts ... (and) collectors should follow the law," Mierzwinski said.

The companies must also keep recordings of 75 percent of all debt collection calls, settlement papers state, and submit signed reports about their compliance with the settlement, under penalty of perjury.

Debt collection attracts the most complaints of industries the FTC regulates, with 125,136 complaints filed in 2012, according to a federal report. "Third-party" collectors that work on behalf of banks and other creditors were the target of 102,783 of the complaints, down 13.4 percent from the previous year.

"Complaints were down in 2012 for the first time in 10 years, so maybe something is working," said Robert Hobbs, deputy director of the National Consumer Law Center.

Dealing with debt collectors
Your rights when dealing with a debt collector are spelled out by the Fair Debt Collection Practices Act , which sets out a process for disputing debts and seeking compensation for unfair or abusive tactics.

See related: FTC: Debt buyers go hunting with skimpy information

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Updated: 03-26-2019