July 3, 2002
Canoga Park, California-based D.C. Credit Services, Inc. and company co-owner, David Cohen, have agreed to pay a $300,000 civil penalty as part of a settlement of Federal Trade Commission charges that they violated the Fair Credit Reporting Act (FCRA) and the Fair Debt Collection Practices Act (FDCPA).
The settlement also would require the defendants to notify consumer bureaus to delete all adverse information the defendants furnished them over the past seven years. The consent decree would permit the defendants to re-report such adverse information only if, upon proper examination, they determine that the adverse information is accurate and reportable.
The 1997 amendments to the FCRA for the first time imposed legal duties on debt collectors, and others that furnish information to credit bureaus, regarding the accuracy of that information. According to the FTC's complaint, D.C. Credit Services and Cohen violated the FCRA by:
- furnishing information to a consumer reporting agency when they knew or consciously avoided knowing that the information was inaccurate;
- failing to notify promptly a consumer reporting agency that previously-furnished information is incomplete or inaccurate, after defendants had so determined;
- furnishing adverse information to consumer reporting agencies without disclosing that the consumer previously had disputed the information being reported; and
- falsely reporting the date of delinquency of a debt.
Further, according to the FTC's complaint, in connection with the collection of debts, the defendants violated the FDCPA by:
- using language whose purpose is to harass, oppress, or abuse consumers;
- communicating, and threatening to communicate, adverse credit information that the defendants knew or should have known was false; and
- furnishing adverse information to consumer reporting agencies without disclosing that the consumer had previously disputed the information being reported.
Both D.C. Credit Services and David Cohen had previously executed consent decrees in 1992, relating to violations of the FDCPA.
In addition to requiring payment of the $300,000 civil penalty, the consent decree prohibits the conduct alleged in the complaint, prohibits other violations of the FCRA or FDCPA, bans defendant David Cohen from future debt collection activity, and includes provisions designed to correct inaccurate information previously reported to consumer reporting agencies by D.C. Credit Services.
The decree provides for a complete and permanent occupational ban on David Cohen's involvement in debt collection, to become effective on October 1, 2002. Until that time, the decree provides that Cohen must cease having personal contact with consumers in connection with debt collection by D.C. Credit Services.