FTC SETTLES WITH RELIEF DEFENDANT FOR ALLEGED VIOLATIONS OF FEDERAL LAW

On October 5, 2004, Elizabeth Sussman entered into an agreement with the Federal Trade Commission to turn over approximately $600,000 she had obtained as a result of a scheme carried out by a now defunct collection agency owned by her husband, Barry Sussman. In its complaint, the FTC alleged that Check Investors, Inc., Check Enforcement, Inc., Jaredco, Inc., Barry Sussman, Elizabeth Sussman and Charles Hutchins (collectively the “defendants”) engaged in a nationwide business practice whereby they would purchase checks returned for non-sufficient funds at a discount from large commercial retailers or companies providing point-of-sale check authorization and check warranty services to commercial retailers. The defendants would then collect payments for the NSF checks on their own behalf. In its complaint, the FTC alleged that the defendants violated the federal Fair Debt Collection Practices Act and the Federal Trade Commission Act by, among other things,:

• Attempting to collect the face amount of an NSF check plus an additional amount generally in the range of $125 to $130 without separately identifying the face value of the check or the additional charge;
• Attempting to collect the $125 to $130 charge even though it (i) was not authorized by agreement and/or (ii) exceeded the maximum allowed by the laws of the consumer’s state;
• Falsely threatening consumers with criminal or civil actions unless they paid the full amount demanded;
• Failing to notify consumers that they had a right to obtain verification of and dispute their purported debts;
• Harassing consumers with repeat telephone calls; and
• Falsely representing that the defendants’ collector was an attorney or that their communications were from an attorney.

The FTC’s legal action against the five other defendants is still pending.

Michael C. Tomkies and Charles V. Gall