FOR IMMEDIATE RELEASE: April 24, 1990
FTC CHARGES MAGAZINE SUBSCRIPTION MARKETER WITH DECEPTIVE DEBT COLLECTION PRACTICES
The Federal Trade Commission has charged American Family Publishers, Inc. ("AFP"), a New York magazine subscription marketer, with violating the Federal Trade Commission Act by using deceptive and abusive debt collection practices. AFP used independent debt collection agencies to send deceptive attorney collection letters to consumers. Through these letters, AFP's collectors misrepresented that AFP intended to take legal action against the consumer.
According to Barry J. Cutler, Director of the FTC's Bureau of Consumer Protection, "this is the first time the Commission has charged a creditor for the illegal collection activities of the debt collectors it approved. Because of their economic influence, the power of large creditors such as AFP over their outside debt collectors is pervasive and, when misused, can operate to undermine compliance with the Fair Debt Collection Practices Act." Cutler further said the issuance of this complaint is a signal that the Commission staff will not hesitate to pursue a creditor who "knowingly approves" such violations. "This case is consistent with an enforcement approach of placing liability on parties who actively assist violations, and who seem willing to make a profit by appearing to look the other way when their associates break the law," said Cutler.
The FTC's administrative complaint charges that AFP's collectors mailed computer-generated form debt collection letters to numerous consumers. These letters were printed on an attorney's letterhead, and some contained a facsimile of an attorney's signature at the bottom. The content and format of the letters allegedly misrepresented that the consumer was about to be sued and that an attorney was actively and substantially involved in the collection of the debt.
The complaint charges that AFP violated the law when it approved the mailing of these letters with knowledge of the misrepresentations they contained. In fact, no attorneys were actively or substantially involved in the collection of the debts at issue, and no legal action was about to be initiated if the debts were not paid. (More) The Commission issues an administrative complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of a complaint is not a finding or ruling that the respondents have actually violated the law. Such action marks the beginning of a proceeding in which the allegations will be ruled upon after a formal hearing.
Copies of the complaint are available from the FTC's Public Reference Branch, Room 130, 6th St. & Pennsylvania Ave., N.W., Washington, D.C. 20580; 202-326-2222; TTY 202-326-2502.
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MEDIA CONTACT: Brenda A. Mack, Office of Public Affairs 202-326-2180
STAFF CONTACT: Jean Noonan, Bureau of Consumer Protection, 202-326-3224
Roger J. Fitzpatrick, Bureau of Consumer Protection, 202-326-3172
(File No. 872-3239)