The Federal Trade Commission announced Wednesday that it had reached a $1 million settlement with a debt collector that allegedly broke laws by misrepresenting itself in threatening text messages to borrowers.

At the head of the scheme was Archie Donovan, a Glendale, Calif., man who headed two companies with legal-sounding names: National Attorney Services and National Attorney Collection Services. But the companies weren’t law firms, and their staff members weren’t lawyers.

Under the guise of being law firms, Donovan’s companies threatened lawsuits or imprisonment via text messages, phone calls and regular mail to borrowers of payday loans and other financing targeted at Spanish speakers. By not revealing themselves as debt collectors, the companies broke consumer protection laws, the FTC said. They also breached debt collection privacy laws by contacting co-workers, employers and acquaintances of borrowers when trying to collect debt payments.

The action is the FTC’s first charges against debt collectors using text messages, a technology that has been largely unregulated but is a popular avenue for marketers and scams. “No matter how debt collectors communicate with consumers — by mail, by phone, by text or some other way — they have to follow the law,” said Jessica Rich, director of the FTC’s bureau of consumer protection. “The FTC has a zero tolerance policy for deception.”

The agency said the companies had broad reach over consumers, having sent more than 1 million texts. The texts were meant to alarm borrowers into responding. “It is URGENT for you to call National Attorney Services regarding a very sensitive matter,” read many texts, which included the borrower’s first and last name and a fake case number.

According to consumer protection and debt collection law, Donovan’s companies were required to disclose they were debt collection agencies and that the consumer had the right to dispute the debt.

In addition to the $1 million civil penalty, the settlement requires the companies to stop sending text messages that do not include proper disclosers. They must obtain permission from borrowers to send text messages.

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