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"
$750K
The FTC finalized an order against Vanilla Chip LLC (doing business as TruHeight) and its principals for deceptively advertising height-enhancing supplements for children and teens without scientific evidence. The company also used fake reviews and incentivized 5-star ratings. The order requires a $750,000 payment and prohibits false health claims and deceptive review practices.
$2.3M
The FTC alleged that RentGrow, a tenant screening company, violated the Fair Credit Reporting Act (FCRA) by failing to use reasonable procedures to ensure the accuracy of its reports, including by reporting duplicate records and failing to disclose data sources. RentGrow agreed to pay a $2.25 million penalty and is prohibited from further FCRA violations and from misrepresenting dispute outcomes.
The FTC and New York Attorney General took action against Handy Technologies for deceptive earnings claims and failure to disclose fees and fines that led to millions of dollars being withheld from workers' wages. The FTC is sending over $2.7 million in refunds to 62,893 affected consumers.
$35.0M
The FTC alleged that Hopper, a travel booking app, charged consumers hidden and pre-selected fees (Tip and VIP Support) without their consent, misrepresented the benefits of VIP Support and Price Freeze services, and failed to clearly disclose total prices. Hopper agreed to pay $35 million for consumer redress and is prohibited from misrepresenting fees under a proposed order.
$1.5M
The FTC finalized a settlement with Publishing.com LLC and its principals for misleading consumers about potential earnings from self-publishing products. The company will pay $1.5 million and is prohibited from making unsubstantiated earnings claims, failing to disclose refund terms, and misrepresenting endorsements and reviews.
The FTC is seeking public comment on a proposed policy statement addressing concerns that AI companies may be manipulating AI system outputs contrary to consumer expectations for objectivity and accuracy. The statement explains that such conduct could be considered deceptive under Section 5 of the FTC Act. The public comment period runs until July 31, 2026.