In March of this year the Federal Trade Commission (“FTC”) filed a formal complaint against collection agency, Security Credit Services, LLC (“SCS”) and Jacob Law Group PLLC (“Jacob”) alleging violations of the Fair Debt Collection Practices Act (“FDCPA”) by charging consumers illegal fees for payments made by telephone and for threatening to file suit against consumers to get them to make payment on debts. The complaint states that in conjunction with SCS, Jacob contacted debtors and pressured them into making payment over the phone, subjecting them to additional fees which would not be incurred when making payment by mail or online. Furthermore, SCS and Jacob falsely threatened to sue consumers who did not agree to make the telephone payment and incur the additional charge.
According to the FTC complaint, SCS and Jacob have worked together since 2006 collecting debts. SCS purchased the debts and then contracted with Jacob to contact debtors for collection on its behalf. In its effort to collect debt, Jacob called on consumers and pressured them to make payment by phone. Together, these two collectors violated the law by falsely threatening to sue consumers as a means of getting them to pay. A debt collector is prohibited by law from using false, deceptive, or misleading representations or tactics when collecting a debt as stated under the FDCPA in section 1692e. The complaint went on to allege that Jacob told the debtors they were required to pay an additional fee of $18.95 when making a payment over the phone, however failed to mention this fee was waived when making a payment by mail or over the internet. Using this tactic, SLS and Jacob collected close to $800,000 since 2008 in fees from consumers.
In April both parties agreed to a settlement where the collection agencies agreed to payback the almost $800,000 collected from consumers in fees over the past several years. Furthermore, SCS and Jacob are barred from making misrepresentations in its collection efforts including collecting additional fees and threatening to file suit against consumers if it is not their intention to do so.