Texas-based debt collector Commercial Recovery Systems, Inc, (CRS) and two of its managers have been sued by the Federal Trade Commission for violating debt collection law.
CRS and its President and Vice President are accused of lying to consumers in an attempt to collect debts. Collectors working at CRS are alleged to have:
- Falsely threatened to sue consumers or claimed that lawsuits had been filed against them
- Falsely claimed or implied that they were attorneys or judicial officials.
- Falsely claimed that they were going to garnish wages, bank accounts or tax refunds when they had no legal authority to do so.
The FTC alleges that CRS never had any intention of filing lawsuits against the people it threatened:
In truth and in fact, Defendants lack the authority or intent to file a lawsuit against the consumers. Defendants do not have authority from clients to sue consumers to collect debts, do not initiate lawsuits against consumers, and do not have attorneys on staff to initiate debt collection lawsuits against consumers.
The FTC also gives a typical example of the threats CRS made to consumers:
[Y]ou will be responsible for the court costs and attorney’s fees. It does include a 25 percent wage garnishment, any accounts that are in your name, they will be garnished; if you receive taxes they will be garnished; if you have 401k, it will be garnished until it is paid.
CRS is alleged to have been breaking the law since 2010. A cursory internet search reveals many online complaints from people targeted by CRS. For example, one consumer in Atlanta reports being harassed over a student loan he never had, in 2013; another received a call from CRS in 2012 stating that there was a “legal matter pertaining to” his Social Security number, but the number was not his; a third received harassing phone calls at work in 2010.
The FTC is not the first regulator to take action against CRS. Its debt collection license was suspended in Connecticut after it failed to co-operate with an examination by the Connecticut Banking Commissioner. CRS also accepted a fine from the Arizona Superintendent of Financial Institutions for failing to keep proper records. CRS has been sued by private attorneys many times, since at least 1999. In fact, in its allegations against the President and Vice President of CRS, the FTC points out that both were involving in settling private FDCPA litigation against the business.