A Glendale, Calif.-based debt collector was fined $1 million for unlawful collection methods, including the use of text messages and misleading consumers into thinking it was a law firm, the Federal Trade Commission said today.
Archie Donovan and two companies under his control—National Attorney Collection Services, Inc. and National Attorney Services LLC—settled with the FTC. The deal marks the first time the commission targeted a debt collector over text messages, the FTC said.
Donovan also used phone calls and mailings that failed to disclose they were debt collectors, according to the commission. In addition to the misleading names of the companies, the companies also implied or misrepresented themselves as calling from a law firm or "collections department" of a law firm, the FTC said.
In its mailings, the companies used envelopes that show a giant hand shaking-down a consumer with money falling from their pockets. As part of the settlement, Donovan and the companies will include a disclosure in its text messages.
"No matter how debt collectors communicate with consumers—by mail, by phone, by text or some other way—they have to follow the law," Jessica Rich, director of the commission's Bureau of Consumer Protection, said in a written statement. "The FTC has a zero tolerance policy for deception."
Baker & Hostetler of counsel Barry Cutler, representing Donovan and his companies, said the companies are now in compliance with federal regulations. "I think text messaging is very common," Cutler said. "This was really a lesson in coming into compliance."