The Federal Trade Commission says it has reached a $1 million settlement with a debt collector that allegedly broke laws by misrepresenting itself in threatening text messages to borrowers.
At the head of the scheme was Archie Donovan, a Glendale, Calif., man who headed two companies with legal-sounding names: National Attorney Services and National Attorney Collection Services. But the companies weren't law firms, and their staff members weren't lawyers.
Under the guise of being law firms, Donovan's companies threatened lawsuits or imprisonment via text messages, phone calls and regular mail to borrowers of payday loans and other financing targeted at Spanish speakers. By not revealing themselves as debt collectors, the companies broke consumer protection laws, the FTC said. They also breached debt collection privacy laws by contacting co-workers, employers and acquaintances of borrowers when trying to collect debt payments.
The action is the FTC's first charges against debt collectors using text messages, a technology that has been largely unregulated but is a popular avenue for marketers and scams.