Feds Shutter Collection Agencies for Harassing Tactics 14:39, July 17, 2016

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Feds Shutter Collection Agencies for Harassing Tactics

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Most collection agencies zealously pursue delinquent debtors—that’s their job, so long as they go about it ethically and legally. But some push professional zeal too far, as a federal crackdown on abusive practices reveals.

BAM Financial Litigation

The Federal Trade Commission (FTC) announced that it has entered a stipulated final order (basically, an out-of-court settlement) with three California collection agencies and two individuals who the FTC claims illegally threatened and harassed consumers.

Examples of the alleged abusive tactics to extract payment include:

(*)  Frequently failing to identify themselves as debt collectors during the initial communication, or to follow up with required notices verifying the debts

(*)  Telling a consumer’s 84-year-old mother that her daughter would be arrested

(*)  Claiming to be bounty hunters

(*)  Threatening the loss of child custody

(*)  Impersonating process servers to deceive employers into providing consumer addresses

(*)  Harassing a victim of identity theft whose debt had already been paid in full

(*)  Impersonating attorneys and falsely threatening imminent litigation

The order requires the collection agencies to pay $4,802,646 or else hand over certain assets, and the individuals to pay over $100,000 total: Luis O. Carrera must pay $59,207, and Roberto Llaury must pay $50,562.

The three collection agencies do business as West and Associates, Chelsea & Associates, and Chelsea Financial. They are named in the lawsuit as BAM Financial LLC, Everton Financial LLC, and Legal Financial Consulting LLC.

During litigation, the court froze the assets and halted the operations of the corporations and individuals charged. The stipulated final order bans all of them from the debt collection business and permits the FTC to monitor their activities.

Culture Counts

A culture of reckless or rogue behavior can lead to more than liability. As the organizations and individuals in the BAM Financial litigation learned, it can tear apart businesses and end careers.

It turns out that not only is unethical conduct bad for business, but the inverse is also true: ethical conduct is good for business. Employees and organizations that share a culture of compliance and purpose motivated by more than the bottom line are often more likely to reach long-term success.

Compliance training is one way employers can foster an ethical professional culture. If you’re unsure about how to do it, this case study on Namely, an HR-compliance startup that combined growth and culture with training, provides an inside look.

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Steve Treagus
Stephen Treagus, JD's, previous practice as an attorney specializing in employment litigation exposed him to the rough-and-tumble world of employment relationships gone awry. Today, this experience informs his articles and courses, helping employers avoid costly litigation and get employment law right. Stephen earned his JD from John F. Kennedy University School of Law and his BA from Sonoma State University.

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