Yesterday the Federal Trade Commission (FTC) announced that it had agreed to a $700,000 settlement with GC Services Limited Partnership (GC) to resolve allegations that GC had used unlawful tactics to collect on federal student loans and other debts. A copy of the complaint filed with the settlement can be found here. A copy of the Settlement/Stipulation can be found here

A summary of the allegations were outlined in the FTC press release.  The FTC alleged:

  • That GC’s collectors left phone messages that illegally disclosed purported debts to others without their permission.
  • GC’s collectors called consumers multiple times after being told that the person who answered did not owe the debt, that they had called the wrong person, or that the person they wanted could not be reached there.
  • GC’s collectors falsely claimed that it would take steps to prevent its employees from making unlawful calls to third parties to find a debtor. 

Per the settlement and stipulated order, GC is paying the sum of $700,000 and prohibited from violating the Fair Debt Collection Practices Act (FDCPA) and from future conduct consistent with the alleged claims at issue in the complaint. 

insideARM Perspective 

As in any settlement with a regulatory body, whether it be the FTC, the CFPB, or a state agency, the devil is in the details. insideARM suggests industry compliance staff and legal departments carefully review the GC agreement. It provides guidance on voice messages, call attempts, and account documentation. 

Many of the allegations in the complaint and the provisions of the settlement agreement appear to deal with the thorny issue of voice mail messages. insideARM has published extensively on this subject, most recently on February 2, 2016 when reporting about a rejection of a class action settlement regarding a voice mail message that was compliant with  the CFPB proposed voicemail message.

The stipulated order has a unique provision regarding voice messages.  Per the order GC is permanently restrained and enjoined from:

  1. Leaving recorded messages, such as on the voicemail, answering machine, or messaging service of any person, in which Defendant both: (1) states the first or last name of the debtor, and (2) discloses that it is a debt collector, is attempting to collect a debt, or that the debtor owes a debt. Provided that, Defendant may leave such a message if: (1) the recorded greeting on the messaging system discloses the person’s first and last name, and only that person’s first and last name, and that first and last name is the same as the person who allegedly owes the debt; (2) Defendant has already spoken with the person on at least one prior occasion using the telephone number associated with the messaging system and confirmed that only that person can access any message left at that number; or (3) Defendant has the prior consent of that person to leave such message at that number. Provided further that, Defendant may not leave such a message under any circumstances if the person has explicitly prohibited Defendant from leaving recorded messages on that phone number.
  2. Communicating with a person about a debt in an in-bound call in response to a message left in compliance with {section} A for the purpose of acquiring location information for the debtor. 

The stipulated order also has a unique provision regarding repeated call attempts.  Per the order GC is permanently restrained and enjoined from:

  1. Contacting any person about a particular account at a telephone number after that person or anyone at that telephone number has informed Defendant, either orally or in writing, that either (a) the debtor that Defendant is trying to contact cannot be reached at that telephone number or (b) the person does not have location information about the debtor Defendant is trying to reach, unless Defendant has a reasonable belief that the person’s earlier statements were erroneous or incomplete, and that such person now has correct or complete location information. 
  2. Failing to create and maintain (for at least three years from the date of last contact with the person) records documenting that a person has informed Defendant, either orally or in writing, that the debtor that Defendant is trying to contact cannot be reached at that telephone number or the person does not have location information about the debtor that Defendant is trying to reach.
  3. Failing to create and maintain (for at least three years from the date of last contact with the person) records documenting that Defendant has a reasonable belief that a person’s statement that the debtor Defendant is trying to contact cannot be reached at that telephone number, or that the person does not have location information about the debtor, were erroneous, incomplete, or out of date, before calling that telephone number again.
  4. Failing to create and maintain audio recordings of at least 75 percent of all telephone calls between Defendants and anyone they contact in collecting on debt, provided that Defendants must commence making such recordings no later than 3 months after the date of this Order and must maintain these recording for 6 months after they are made.
  5. Provided that, for purposes of this subsection, to have a reasonable belief that a person’s earlier statements were erroneous or incomplete and that such person now has correct or complete location information, Defendant must have: (1) conducted a thorough review of all applicable records, documents, and database entries for the debtor Defendant is trying to reach to search for any notations that indicate that the debtor cannot be reached at that telephone number or that the person does not have location information about the debtor Defendant is trying to reach; and (2) obtained and considered information or evidence from a new or different source other than the information or evidence previously relied upon by Defendant in attempting to contact the debtor Defendant is trying to reach, and such information or evidence substantiates Defendant’s belief that the person’s earlier statements were erroneous or incomplete and that such person now has correct or complete location information.

This settlement should be reviewed in conjunction with the CFPB Outline of proposed rules and the CFPB suggestion on voice mail messages and their suggested limits on call attempts.

Finally, insideARM spoke with a representative of GC and asked for comment on the case.  The following is their response to the settlement:

GC Services’ Statement on FTC Settlement 

On February 14, 2017, GC Services Limited Partnership released the following statement from Chief Executive Officer and President Frank A. Taylor in response to the recent settlement with the Federal Trade Commission (FTC).  

“We are pleased to have resolved this matter with the Federal Trade Commission, which concerns phone calls made some years ago. We cooperated fully with the FTC’s investigation. We are also pleased the FTC alleged no conduct that was abusive, deceptive, or harassing towards our clients’ customers. This settlement will shed light on how to leave voice messages that comply with the FDCPA, an issue on which courts have disagreed.

“We pride ourselves on being a compliance-driven company—one entrusted for almost six decades with providing exceptional customer service to all of our clients’ customers. We hold ourselves to the utmost standards and strive to comply with all applicable laws and regulations. We will continue to provide our clients with quality service while interacting with their customers in an ethical, compliant manner.”


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