Penalty Amount
$24,300,000
The FTC settled with Midwest Recovery Systems for engaging in 'debt parking,' where it placed inaccurate debts on consumers' credit reports to force payment. The company collected over $24 million from such debts. The settlement requires it to delete all reported debts, stop the practice, and pay a $24.3 million monetary judgment.
Midwest Recovery must cease debt parking, delete all debts it reported to credit bureaus, and pay a monetary judgment of $24.3 million, with $56,748 due immediately and the rest suspended.
In-house legal teams should review all vendor and third-party service agreements, particularly those with debt collection agencies, data furnishers, and credit reporting service providers. Specific clauses to scrutinize include data accuracy warranties, credit reporting and furnishing obligations, dispute resolution mechanisms, indemnification provisions for Fair Credit Reporting Act (FCRA) violations, and audit rights. Agreements may require amendments to mandate pre-reporting debt validation, immediate deletion of disputed or inaccurate information, regular compliance certifications, and robust record-keeping requirements to prevent 'debt parking' or similar practices.
Entity
Midwest Recovery Systems
Also known as: Midwest Recovery
Industry
Financial ServicesOfficial Press Release
https://www.ftc.gov/news-events/news/press-releases/2020/11/ftc-stops-debt-collectors-alleged-debt-parking-scheme-requires-it-delete-debts-it-placed-consumers
02 stipulation for permanent injunction and monetary judgmen
https://www.ftc.gov/system/files/documents/cases/02_-_stipulation_for_permanent_injunction_and_monetary_judgment.pdf
01 complaint
https://www.ftc.gov/system/files/documents/cases/01_-_complaint.pdf
Federal Trade Commission Enforcement Page
https://www.ftc.gov/enforcement
"Midwest Recovery Systems"
"monetary judgment of $24.3 million"
"FTC Act"
"Fair Debt Collection Practices Act (FDCPA)"
"Fair Credit Reporting Act (FCRA)"
"FCRA’s Furnisher Rule"
$930K
The FTC finalized orders requiring CMG Media Corporation (doing business as Cox Media Group), MindSift LLC, and 1010 Digital Works LLC to pay a total of $930,000 for falsely claiming they offered an AI-powered service that could target ads based on conversations captured from consumers' smart devices, and that consumers had opted into such targeting. The orders also prohibit the companies from making misrepresentations about their advertising services, voice data collection, and consumer consent.
The FTC announced it is seeking public comment on a proposed enforcement policy statement regarding personalized pricing, which is the use of personal data to set prices based on what a company believes an individual consumer is willing to spend. The statement warns that undisclosed collection or use of personal data for personalized pricing could violate the FTC Act's prohibition on unfair or deceptive practices. The Commission voted 2-0 to authorize the Federal Register notice.
$4.0M
The FTC and Connecticut secured a $4 million settlement with Chase Nissan LLC (doing business as Manchester City Nissan) over allegations the dealership charged consumers unauthorized fees, including double-charging for 'certified pre-owned' vehicles and inserting charges like total loss protection into financing agreements without consent. The settlement requires $4 million in consumer redress, prohibits misrepresentations about vehicle certification and warranties, mandates prominent disclosure of the maximum total vehicle price, and requires express informed consent for all charges.
The FTC filed a complaint against Credit Glory LLC and related entities for deceptive credit repair practices, including false promises, impersonating debt collectors, charging illegal upfront fees, and using negative option billing without consent. A federal court temporarily halted the operation.
The FTC issued a policy statement abandoning disparate-impact liability, stating it will no longer bring claims based on this theory. It also modified compliance obligations for several companies based on past decisions.
The FTC, along with Utah and California, filed a complaint against Hims & Hers alleging the telehealth provider shared consumers' sensitive health information with third-party advertising platforms without consent, and deceived consumers about billing and cancellation practices. The complaint alleges violations of the FTC Act and the Restore Online Shoppers' Confidence Act.