American Municipal Services Corp., a collection agency that collects on behalf of more than 500 municipalities across the country, has reached a settlement with the Federal Trade Commission and agreed to stop engaging in allegedly illegal tactics.
The agency was using collection letters that had “Warrant Enforcement Division” or “Municipal Enforcement Division” at the top of the letter, which made individuals believe the letters were coming directly from a government agency. The company also sent notices threatening imminent arrest, the suspension of their driver’s licenses, and that debts would be reported to the credit reporting agencies.
Under the settlement, the agency will stop using misrepresentations when collecting debts, and will pay a $350,000 fine.
Even though it did not report debts to credit reporting agencies, the collection agency include language like this in its letters:
The remedies available to the city are usually costly and time consuming and could affect your credit. As you know, having good credit is important if you ever plan on purchasing a car or house, having utilities turned on, obtaining credit cards, or even obtaining employment as many employers review an applicant’s credit reports before hiring them. It is therefore very important that you give this matter your immediate attention.
AMS has also agreed to a number of compliance and monitoring guidelines, which it must follow for up to the next 20 years. In one year, for example, the agency must submit a compliance report, which includes:
- the primary physical, postal, and email address and telephone number, as designated points of contact, which representatives of the FTC may use to communicate with Defendant
- identify all of that Defendant’s businesses by all of their names, telephone numbers, and physical, postal, email, and Internet addresses
- describe the activities of each business, including the goods and services offered, the means of advertising, marketing, and sales, and the involvement of any other Defendant (which Individual Defendant must describe if he knows or should know due to his own involvement)
- describe in detail whether and how that Defendant is in compliance with each Section of this Order
- provide a copy of each Order Acknowledgment obtained pursuant to this Order, unless previously submitted to the FTC.
