Under a Feb. 14 court-approved stipulation between the Federal Trade Commission or FTC and GC Services, LP, the large third-party debt collector will pay to the U.S. Treasury a $700,000 civil penalty for student-loan collection practices that allegedly violated federal consumer-protection laws, including the Fair Debt Collection Practices Act or FDCPA.
One of the main responsibilities of the Federal Trade Commission or FTC as a federal agency is to protect consumers from unfair and illegal business practices, including protection from collectors who are violating the law in their collection practices.
In addition to the fine, the collector agreed to follow applicable laws and keep records proving it is doing so for a minimum of three years.
The student-loan problem
According to an FTC press release about the settlement, more than 40 million people carry student loan debt. The average total student loan debt is a whopping $29,000. That money could provide a down payment on a home or buy a car. While in school, many students do not consider what kind of monthly payments will actually be due on student loans and how their lifestyles will be impacted.
It is understandable why so many people in the U.S. have hefty student loan balances. The cost to attend colleges and universities has skyrocketed. We just got out of a severe recession that impacted people's pocketbooks in a serious way. Many want to get college degrees or higher or complete vocational training programs, so that their chances of making decent livings improve.
So to make higher education possible, student loans are often the only option. But after graduation, the monthly amount due on those loans may be so high that rent, car payments, insurance and other bills are impossible to sustain. So what sometimes goes late is the student loan payment.
Similarly, parents approaching retirement age who see their kids taking out student loans sometimes take out parent-eligible student loans to help with their children's tuition bills, only to be left high and dry with those student loan payments due when a job loss, serious illness un unexpected death occurs and the family cash flow is interrupted.
People in either of these circumstances may face aggressive debt collectors, but the collectors are required to follow consumer protection laws.
The GC Services case
The court order is the culmination of FTC allegations against GC Services that the collection agency violated federal law, including the Fair Debt Collection Practice Act or FDCPA. Allegations of illegal practices by GC Services included:
- Making multiple calls to a party after having been already told that the party did not owe on the student loan, that the wrong person was getting the call or that the debtor sought was not at that phone number
- Leaving voicemail messages that revealed information about the debtor's obligations to creditors without having the debtor's permission to do so
- Asserting falsely that the collector would stop its workers from illegally calling other parties in an effort to locate the debtors involved
In addition to these illegal practices, the FTC provides other information about what the FDCPA forbids on its website. If you are struggling with high student loan payments, especially when aggressive collection agencies are involved, learn about your legal rights and legal remedies by talking to a consumer-protection lawyer.