A Glendale, Calif.-based owner of two collection agencies will pay $1 million to settle Federal Trade Commission charges that his employees used text messages to try collecting debts - without disclosing they were debt collectors.

Archie Donovan and the companies he controls - National Attorney Collection Services Inc. and National Attorney Services LLC - are charged with violating both the Fair Debt Collection Practices Act and the FTC Act. According to the FTC's complaint, employees used English- and Spanish-language text messages and phone calls and falsely portrayed themselves as working for law firms. Building on the names of the companies, the defendants falsely threatened to sue consumers for not paying their debts or to garnish their wages.

The FTC also alleged that Donovan and his companies illegally revealed debts to the consumers’ family members, friends and co-workers. Among other tactics, the defendants used mailing envelopes picturing a large arm shaking money from a consumer who is strung upside down. The law does not allow debt collectors to disclose publicly someone’s private debts because doing so could endanger their jobs and reputations. Mailing envelopes can include only the name and address of the company, and cannot indicate that the consumer may owe a debt.

Along with the $1 million civil penalty, the settlement requires the defendants to stop sending text messages that do not include the disclosures required by law, and to obtain a consumer’s express consent before contacting them by text message. The defendants also are barred from falsely claiming to be law firms, and from falsely threatening to sue or take any action – such as seizure of property or garnishment – that they do not actually intend to take.

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