The U.S. District Court for the Eastern District of Texas has granted the government’s motion for summary judgment against Texas-based collection agency Commercial Recovery Systems Inc. and its president, Timothy Ford.
The Department of Justice, on behalf of the Federal Trade Commission, filed a complaint in January against Commercial Recovery and its current and former principals for alleged violations of the Fair Debt Collection Practices Act and the Federal Trade Commission Act, claiming that the company engaged in illegal collection activities nationwide involving credit card debts and auto loans.
According to the complaint, Commercial Recovery allegedly used “coercive and deceptive” collection tactics since at least 2010 including telling people they must pay an alleged or they will be sued, telling people that a lawsuit already has been filed and directing agents to claim or imply that they are an attorney or employed with the courts. The defendants’ collectors allegedly threatened consumers with legal action, although the defendants never filed any lawsuits nor intended to file any lawsuits against the debtors with whom they communicated. They also routinely lied to consumers that nonpayment would result in seizure, garnishment or property attachment proceedings.
The district court agreed that Commercial Recovery and Ford violated the FDCPA and FTCA. The court concluded that the "summary judgment record is clear and it is uncontroverted that [Commercial Recovery Systems] is a debt collector covered by the FDCPA and that its collectors have committed numerous violations of the FDCPA and Section 5 of the FTC Act.”
Because Commercial Recovery has declared bankruptcy, the Department of Justice did not seek civil penalties. But the court found that Ford, who had the authority to control the company’s collection practices, was liable for civil penalties for FDCPA violations committed by the company. The court additionally held that injunctive relief against both Defendants was appropriate.
