FTC settles with municipal debt collector for abusive collection practices

On March 24, 2017, the Federal Trade Commission (FTC) issued a press release announcing a consent order with American Municipal Services Corporation, a debt collection company accused of engaging in illegal collection tactics.

American Municipal Services Corporation is a debt collection firm that collects court fines, parking tickets, and debts for utility bills and other services on behalf of over 500 municipalities throughout various states.

According to the press release, American Municipal’s collection tactics violated the Fair Debt Collection Practices Act (FDCPA) and Section 5 of the Federal Trade Commission Act (FTC Act) which prohibits unfair or deceptive acts or practices.

According to the FTC’s complaint, American Municipal would use government letterhead to falsely suggest that a warning letter was coming from a government agency. The company would also send a “FINAL NOTICE” that falsely suggested that the consumer would be arrested for nonpayment, that their driver’s license may be suspended for nonpayment, or that the debts would be reported to a consumer reporting agency.

The consent order permanently enjoins American Municipal from misrepresenting the following:

  • That a warrant has been issued for a consumer’s arrest
  • That consumers must act immediately to avoid arrest
  • That failure to respond to a collection letter may result in an arrest warrant being issued and/or revocation of the consumer’s driver’s license
  • That communications are from a government agency
  • That a consumer’s payment status will be reported to consumer reporting agencies

American Municipal must also pay a $350,000 judgment as equitable monetary relief.

Tags: Debt Collection, FTC

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