With more than 40 million consumers holding thousands of dollars in student loan debt, it’s no surprise that student loan debt collection is a growing business. Yet, these collectors must follow federal rules when it comes to enticing debtors to repay their obligations. Despite this, federal regulators say one company wasn’t following the rules, and must now pay $700,000.
The Federal Trade Commission announced Tuesday that debt collection company GC Services has agreed to pay $700,000 to resolved allegations it used unlawful tactics to collect on federal student loans and other debts.
GC Services works as a third-party collector for a number of industries and the federal government, collecting debts for student loans, taxes, and other outstanding loans.
According to the FTC’s complaint [PDF], GC Services’ employees allegedly left phone messages for debtors that illegally disclosed their debt to others without permission.
Under the Fair Debt Collection Practices Act, collectors are prohibited from speaking of a consumers’ debt with anyone other than the consumer or their lawyers without express permission.
In many cases, the FTC claims that GC Services employees also called consumers multiple times after being told that the person who answered did not owe the debt, that they had called the wrong person, or that the person they wanted could not be reached there.
According to the FTC, GC Services previously said that it would take steps to prevent employees from making unlawful calls to third parties to find a debtor. But that didn’t happen, the FTC alleges.
Under the proposed settlement, GC Services will pay a $700,000 civil penalty and revise its policies and practices related to contacting customers.
by Ashlee Kieler via Consumerist