Two Companies Settle Harassment Charges Relating to Debt Collection
August 25, 2004
Two companies whose representatives allegedly harassed consumers with multiple phone calls and abusive language have agreed to settle Federal Trade Commission charges that their business practices violated federal law. The FTC’s complaint against Applied Card Systems alleged that, as part of the companies’ debt collection practices, representatives repeatedly call third parties who had already told them they did not have any information about the consumers from whom the companies were trying to collect payments.
According to the FTC, representatives of Applied Card Systems, Inc., and Applied Card Systems of Pennsylvania, Inc., call third parties, including relatives, neighbors, and employers, attempting to get information about where consumers live or work in order to contact them about a delinquent debt. The FTC alleges that the representatives have continued to call these third parties, even after they have told the representatives that the consumer they are looking for does not reside or work with them. Many of the third parties requested that the representatives stop calling them. The FTC charges that, in many cases, the companies’ representatives harassed the third parties with repeated phone calls, and abusive, sometimes obscene, language.
The consent order bars the respondents from:
- Contacting any third party more than once unless the third party requests that they do so, or unless they reasonably believe that the third party gave them incorrect or incomplete information and now has further information;
- Harassing third parties with abusive or obscene language or repeated phone calls;
- Communicating with a consumer to collect on a delinquent debt: (1) at a time or place the consumer has said is inconvenient; (2) at the consumer’s place of employment if the consumer has already stated that the employer prohibits personal phone calls; and (3) if the consumer is represented by an attorney with respect to the debt;
- Falsely representing to consumers the amount or status of a debt or threatening to take action against a consumer that they do not intend to take or that is illegal to take;
- Collecting any amount other than the amount expressly stated in the agreement creating the debt; and
- Applying a consumer’s payment in a way that the consumer has not directed.
The proposed consent agreement also contains standard record keeping requirements to assist the FTC in monitoring the Respondents’ compliance.
Announced Actions for October 8, 2004
October 8, 2004
FTC staff comments on Arkansas state contact lens laws: In response to an inquiry from Arkansas Representative Doug Matayo, Federal Trade Commission staff in the agency’s Office of Policy Planning, Bureau of Consumer Protection, and Bureau of Economics have issued comments concerning whether certain Arkansas regulations on contact lenses are preempted by the new federal Fairness to Contact Lens Consumers Act. FTC staff considered the Act, the FTC’s Contact Lens Rule, and Possible Barriers to E-Commerce: Contact Lenses – an FTC staff report issued in March 2004 – in evaluating Arkansas law.
The FTC staff concluded that two features of the Arkansas law appear to be preempted by federal regulations. First, the Arkansas legislation specifies that contact lens prescriptions should be released to consumers ‘upon request’ and ‘upon payment’ for the eye examination and lens fitting. Federal law requires prescribers, such as optometrists and ophthalmologists, to provide patients with a copy of their contact lens prescription immediately upon completion of a fitting, rather than ‘upon request.’ Federal law also allows a prescriber to require payment prior to prescription release only if the prescriber requires immediate payment where an examination reveals no need for contact lenses or other ophthalmic goods. Second, Arkansas law forbids the sale of contact lenses unless “positive verification” of a consumer’s prescription is made in accordance with state law. The federal law requires contact lens sellers either to obtain a copy of a patient’s prescription or verify the prescription before selling contact lenses, and deems a prescription “verified” if, among other things, a prescriber fails to respond to a seller’s verification request within eight business hours.
The Arkansas legislation also requires that third-party providers of contact lenses, such as mail order, Internet, and other alternative providers, be licensed in Arkansas to sell contact lenses to Arkansas residents. The FTC’s comments argue that such a requirement likely results in higher prices and reduced consumer choice, which could increase the incidence of health problems associated with contact lens use, such as over-wearing. By contrast, federal law permits third-party sellers to sell contact lenses to consumers as long as they have a valid prescription. In its comments, the FTC staff recommends that Arkansas rescind its licensing requirement and, if the state finds it necessary to regulate contact lens sellers beyond existing regulations, it should consider adopting a simple registration requirement instead.