Asset Acceptance LLC, one of the nation’s largest debt buyers, will pay the Federal Trade Commission (FTC) $2.5 million to settle charges that it misled consumers while trying to collect old debts.
The company will also have to tell consumers if a debt they’re trying to collect is time barred, meaning it’s too old to warrant a lawsuit, a development that is a huge pro-consumer provision, Cleveland consumer attorney Ed Icove told the Cleveland Plain Dealer
In Ohio and many other states, time-barred debts can be revived if a consumer makes even a small payment, meaning the debt is no longer covered under laws giving a time frame when lawsuits can be filed.
Under the terms of the settlement, once a customer learns the debt is time barred, Asset Acceptance cannot sue, even if the consumer eventually makes a payment.
Asset Acceptance, a subsidiary of Asset Acceptance Capital Corp. of Michigan, buys old debts from companies — ranging from gyms to banks — for only pennies on the dollar and then profits from the debts it is able to collect.
According to the FTC, many of the debt files came with little information about the locations or identities of the consumers, so Asset find new details, including Social Security numbers, to track down debtors. However, the FTC said, the company did not investigate when consumers said they were not the people being sought.
In addition, the lawsuit said, Asset mailed debt collection notices to consumers but did not follow up. Some consumers found out about the collection attempts only when they received negative credit reports but did not know who Asset was or what the debt involved.
Asset, while settling the case, admitted no wrongdoing and claimed many of its practices have changed since the FTC started investigating it in 2006. As part of the settlement, though, the company must stop collection efforts for the time being while it investigates consumers’ complaints.
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