Capital Credit Corp., a nationwide debt collection agency based in Washington, yesterday ageed to pay a $75,000 fine to settle Federal Trade Commission charges that it harassed and abused consumers across the country.
Without admitting violations of federal law, the company signed a consent agreement with the commission.
The fine is one of the largest ever leived by the FTC against a private company and the case is the first enforcement action brought by the FTC entirely under the 1978 Fair Debt Collection Practices Act.
Capital Credit, which is based at 7600 Georgia Ave, NW and also has an office in Falls Church, was charged by the FTF with harassing debtors through third parties, calling consumers at work, using language to "harass, oppress or abuse" and collecting debts "by use of false, deceptive or misleading dunning notices."
Those notices stated that the consumer would be sued within a period of time unless payment was received, the FTC said. The company has no such power, the FTC charged, and such threats violate the debt collection act.
In addition to agreeing to pay the fine, Capital Credit also ageed to send a disclosure statement to all debtors they contact. That notice says that the firm must stop communication with the comsumer if a request to that effect is made.
The company also agreed to stop the practices, identify its representatives to consumers, use only one alias per debt collector, and log all communications with a debtor.
James Taylor, vice president of Capital Credit, said that there is "certainly no merit to the charges" and said that "like most other companies in this situation we settled the issue to avoid costly litigation.
The company operates 16 branch offices throughout the country and is considered one of the nation's 10 largest debt collection agencies. Each month the firm receives about 240,000 new cases.
If the company had not agreed to setle the case, it could have been taken to court and if found guilty, charged with penalties of up to $10,000 per violation.
The consent decree was filed by the Department of Justice at the FTC's request in U.S. District Court here. Sources said the filing of the case is the first in a series of major cases the commission expects to bring against major debt collection firms.