Debt Collector Fined $2.5 Million
Federal authorities reached a settlement Monday with Asset Acceptance LLC, a major debt collector, over deceptive practices in collecting consumer debt. Under the terms of the settlement, the company will, pay a civil penalty of $2.5 million. Asset Acceptance, which purchases old credit-card debt and other obligations from companies like health clubs and utilities, also settled separate charges that it failed to properly investigate claims from consumers that their records were incorrect and the company often contacted consumers repeatedly about debts which they did not owe.
According to a complaint filed is a US District Court in Florida, some consumers did not find out about Asset’s debt claims on them when applying for a mortgage or car loan, and some even paid the illegitimate debts just to ensure they got the loans. The company also insinuated to consumers during collection attempts that they could be sued for the debts, even in cases where the debt had passed the statute of limitations.
The company was also accused of misrepresenting the amount of debts owed and filing false information with credit reporting agencies. Debts that ended up in Asset Acceptance’s possession were typically those that were uncollected by the original debt holder as well as another collection agency, meaning that many were inaccurate because the older a debt is, the less accurate it typically is. A spokesman for the collection agency said it does not expect any adverse effects from the settlement with regulators, which was agreed upon without admittance of guilt.
As of September 30, 2010, Asset Acceptance held 34 million accounts with an original value of over $42 billion. According to regulatory filings, it paid 2.54 percent of face value for those accounts, on average.