Continental Collection Service

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IN THE MATTER OF CONTINENTAL COLLECTlOK SERVICE, ET AL.

CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket C-2811. Complaint, Mar. 1976-Decisivn, Mar. , 1976 Consent order requiring a Clarissa, Minn., debt collection agency, among other things to cease misrepresenting the nature, import or urgency of any communication utilized in the collection of delinquent debts; misrepresenting the initiation of legal actions; misrepresenting that if debts are paid within a specified time respondent wil absorb the cost of any legal actions initiated; and furnishing means or instrumentalities of misrepresentation or deception. Further, respondents are required to disclose in cOITespondence to alleged debtors that respondents do not accept payment nor ordinarily fie suits. Appearances For the Commission: Roger J. Fitzpatrick. For the respondents: Rodger J. Johnston, Flora Johnston Long Prairie, Minn.

COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that Continental Collection Service, a partnership, and Carol Carrck and Morrs Perna, individually and as copartners trading and doing business as Continental Collection Service, hereinafter sometimes referred to as respondents have violated the provisions of said Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint stating its charges in that respect as follows:

PARAGRAPH 1. Respondent Continental Collection Service is a partnership organized, existing and doing business under and by virtue of the laws of the State of Minnesota, with its principal offce and place of business located at Main St., Clarissa, Minnesota. Respondents Carol Carrick and Morrs Perna are individuals and are partners in Continental Collection Service. They formulate, direct and control the acts and practices of Continental Collection Service including the acts and practices hereinafter set forth. Their business address is Main St., Clarissa, Minnesota and their mailng address is Box 6011 , West St. Paul, Minnesota.

PAR. 2. Respondents are now and for some time in the past, have CO:-TINENTAL COLLECTION SERVICE . ET AL. 583 582 Complaint been engaged in the advertising, offering for sale and sale of a service to assist in the collection of alleged delinquent debts. This service consists of the preparation by the respondents of a series of form notices and letters to be mailed to alleged delinquent debtors at regular intervals. Two styles of forms are used in this series: 1) that which is titled TELEGRAM; and 2) that which bears the letterhead of Continental Collection Service.

PAR. 3. In the course and conduct of their business, respondents are now, and for some time in the past have been, engaged in sending to and receiving from persons, firms and corporations located in various States of the L'united States, by means of the United States mail letters, notices, forms and other material for use in the collection of alleged delinquent debts. Respondents maintain, and at all times mentioned herein have maintained a substantial course of trade in said business in or affecting commerce, as Hcommerce " is defined in the Federal Trade Commission Act.

PAR. 4. In the course and conduct of their business, and for the purpose of inducing the payment of alleged delinquent debts, respondents mail, or cause to be mailed, to alleged delinquent debtors various printed forms and other printed material.

Typical and ilustrative, but not necessarily all inclusive, of said forms and material are the following:

1. A yellow window envelope on which a return address is printed with no name. The word TELEGRAM is printed in large black type over the window.

2. A yellow, printed form styled TELEGRAM, printed in large black type, designed to be inserted in the envelope described in subparagraph 1 ofthis Paragraph.

PAR. 5. By and through the use of envelopes and forms described in subparagraphs 1 and 2 of Paragraph Four, respondents have represent- , and are now representing, directly or by implication, that the communication is a telegraphic message.

PAR. 6. In truth and in fact the communication is not a telegraphic message. Rather, it is a printed form letter, mailed to alleged delinquent debtors, which form by its color and appearance, styling, printing and format simulates a telegraphic message and which, by virtue of said simulation, misleads the recipient as to its nature, import purpose and urgency.

Therefore, the use by respondents of said envelopes and forms as set forth in Paragraph Four was and is false, misleading and deceptive. PAR. 7. In the course and conduct of their business, and for the purpose of inducing the payment of alleged delinquent debts, respondents mail, or cause to be mailed, to alleged delinquent debtors various .. .. .. Complaint 87 F.

printed forms, letters and other printed material containing certain statements and representations.

Among and typical, but not all inclusive, of such statements and representations are the following:

CONTINENTAL COLLI'CTION SERVICE (Letterhead) WI' HEREBY GIVE NOTICE THAT WE HAVE BEEK RETAINED BY THE ABOVE KAMED CREDITORS TO COLLECT THE ABOVE DELINQcENT SUM. OUR POLICY IS TO ALLOW SEVEN (7) DAYS BEFORE WE BEGIN COLLEC TION PROCEDURES. IT IS DIPERATIVE THAT YOU CONTACT YOUR CRED ITOR AND ARRAKGE PAYMENTS BEFORE THE LAPSE OF SEVEN DAYS" * * Y ou are hereby notified that Continental Collection Service has instituted collection procedures.

Furthermore, we have recommended that our client should commence legal proceedings and obtain a court judgment for the above amount. Satisfaction of such judgement often involves attachment of property and garnishment of wages. To avoid all these costly remedies to yourself, contact your creditor within five (5) days to avoid the legal pursuance of the above action.

We wish to notify you that your creditor has taken our recommendation to begin necessary legal steps to recover the above amount. We would remind you that legal proceedings may involve levies upon your automobile, real estate, bank accounts and all other personal belongings. Such above mentioned properly may be held for public auction for the satisfaction of any judgment obtained from the above amount. Furthermore, you as debtor, may be assessed additional amounts in excess of the above amount to include interest and court costs such as: fees for subpoenas attachments, garnishments, sheriffs fees, judgment and execution :; * *Submit payment of this claim within two (2) days and we wil recommend that our client absorb any and all costs incurred in the above action as of this date. It is important that you immediately attend to the above delinquent amount within the next forty-eight (48) hours. If full settlement is not made with your creditor within the time period allotted, we shan recommend that he advance court costs and proceed with the proper legal steps to secure his rightful claim under state statute. Settlement deadline is twenty-four (24) hours from the receipt of this notice If suffcient payments are made to the creditor we wil forestall the time period set at the claimant's claim office, your creditor will advise us if you have contacted him CONTINENTAL COLLECTION SERVICE, ET AL. 585 582 Complaint whereupon we wil take the necessary steps to discontinue any further action, thus eliminating any personal appearance that may have been required by yourself. However to pre':ent this, you must act today within twenty-four hours. * '" "'Therefore unless the said debtor arranges for adjustment in said indebtedness or appears at the office of the creditor within seven (7) days of this dated notice, suit wil be brought for the total amount of the indebtedness, together with interest and costs. PAR. 8. By and through the use of the aforesaid statements and representations, including the use of the word "collection" in the business name, and others of similar import not expressly set out herein, respondents have represented, are now representing, have caused and are now causing others to represent, directly or by implication, that:

1. respondents' business is a collection agency; 2. delinquent debtors' accounts are referred to respondents by creditors for collection;

3. respondents are prepared to recommend or have recommended that legal action be initiated;

4. legal action with respect to a delinquent debt has been or is about to be initiated on the basis of respondents' recommendation; and 5. respondents wil recommend that the creditor absorb the cost of recommended legal action if the debt is paid within a specified time. PAR. 9. In truth and in fact:

1. respondents' business is not a collection agency; 2. delinquent debts are not referred by creditors for collection; 3. respondents are not prepared to recommend and have not recommended that legal action be initiated; 4. legal action with respect to a delinquent debt has not been, nor is it about to be initiated on the basis of respondents' recommendations; and 5. respondents do not recommend that the creditor absorb the cost of recommended legal action if the debt is paid within a specified time; On the contrary, respondents' sole business is the preparation and mailing of form letters to alleged delinquent debtors, exhorting them to pay their creditors.

Therefore, the statements and representations set forth in Paragraphs Seven and Eight were and are false, misleading and deceptive. PAR. 10. In the course and conduct of their business, and at all times mentioned herein, respondents have been, and are now in substantial competition, in commerce, with corporations, firms and individuals 216- 909 O-LT - 77 - 38 IR6 FF,DERAL TRADE COMMISSION DECISIONS Decision and Order 87 F.

engaged in providing services of the same general kind and nature as those provided by respondents.

PAR. 11. The use by respondents of the envelopes and forms as set forth in Paragraph Four hereof, has had, and now has, the tendency and capacity to mislead and deceive members of the public into the erroneous and mistaken belief that the said communication is a telegraphic message. Furthermore, the use by respondents of the aforesaid false, misleading and deceptive statements, representations and practices has had and now has the tendency and capacity to mislead members of the public into the erroneous and mistaken belief that said statements and representations were and are true and to induce the payment of su bstantial sums of money by reason of said erroneous and mistaken belief.

PAR. 12. The aforesaid acts and practices of respondents, as herein alleged, were and are al1 to the prejudice and injury of the public and of respondents' competitors and constituted, and now constitute, unfair methods of competition and unfair and deceptive acts and practices in or affecting commerce in violation of Section 5 of the Federal Trade Commission Act.

DECISION AND ORDER The Commission having heretofore determined to issue its complaint charging the respondents named in the caption hereto with violation of the Federal Trade Commission Act, and the respondents having been served with notice of said determination and with a copy of the complaint the Commission intended to issue, together with a proposed form of order; and The respondents and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondents of all the jurisdictional facts set forth in the complaint to issue herein, a statement that the signing of said agreement is for settement purposes only and does not constitute an admission by respondents that the law has been violated as alleged in such complaint and waivers and other provisions as required by the Commission Rules; and The Commission having considered the agreement and having provisionally accepted same, and the agreement containing consent order having thereupon been placed on the public record for a period of sixty (60) days, and having duly considered the comments fied thereafter pursuant to Section 2. 34(b) of its Rules, now in further conformity with the procedures prescribed in Section 2.34 (b) of its Rules, the Commission hereby issues its complaint in the fonn CONTINENTAL COLLECTION SERVICI';, ET AL. 587 5R2 Decision and Order contemplated by said agreement, makes the following jurisdictional findings, and enters the following order:

1. Respondent Continental Collection Service is a partnership organized, existing and doing business under and by virtue of the laws of the State of Minnesota, with its principal office and place of business located at Main St., Clarissa, Minnesota.

Respondents Carol Carrick and Morris Perna are individuals and are partners in said partnership. They formulate, direct and control the policies, acts and practices of said partnership and their address is the same as that of said partnership.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER It is ordered That respondents, Continental Collection Service, a partnership, and Carol Carrick and Morrs Perna, individually and as copartners, trading and doing business as Continental Collection Service, or under any name or names, their successors and assigns, and respondents' agents, representatives and employees, directly or through any corporation, subsidiary, division or other device, in connection with the offering for sale, sale or distribution of any service or printed matter for use in the collection, or attempting to collect, or assisting in the collection of, or inducing or attempting to induce, the payment of alleged delinquent debts in or affecting commerce, as do commerce" is defined in the Federal Trade Commission Act, forthwith cease and desist from:

1. U sing or placing in the hands of others for use, envelopes, letters forms or any other materials which by their appearance misrepresent a telegraphic communication.

2. Using or placing in the hands of others for use, envelopes, letters forms or any other materials which misrepresent the nature, import purpose or urgency of any communication; provided that it shall not be a violation of this order for respondents to use within the message of any communication, in the same type size as is otherwse employed in the message, a truthful reference to or implication of urgency. 3. Representing, directly or by implication, that: (a) respondents have recommended, are prepared to recommend initiate or cause to be initiated, legal proceedings in the collection of an alleged delinquent debt;

(b) legal action with respect to an alleged delinquent debt has been or is about to be initiated; or misrepresenting that legal action is imminent, wil be or may be initiated;

588 FEDERAL TRADE COM)!ISSION DECISIONS Decision and Order 87 F.

(c) respondents recommend or have recommended that the creditor absorb the cost of legal action if the debt is paid within a specified time. Provided, however That it shall be a defense in any enforcement proceeding initiated under this Paragraph Three for the respondents to establish that such representations are factually correct. 4. Failing clearly and conspicuously to disclose in each letter, form or notice to alleged delinquent debtors the following statement: This communication is a reminder of creditor s claim. Continental Collection Service does not accept payment. Continental Collection Service does not ordinarily fie suit. This statement shall be made in prominent type, of a size no smaller than the basic body copy in the letter, form or notice and in a color which contrasts with the color of the stationery and writing or printing in the body of the letter, form or notice.

Provided, however That the portion of the above statement, either as to accepting payment or the fiing of suit, or both, shall not be required where respondent indicates specifically in a particular letter, form or notice that it wil accept payment, fie suit or institute legal proceedings and respondent does, in fact, accept payment, fie suit or institute legal proceedings in that particular case, unless, suit was not fied due to subsequent instructions from the creditor or subsequent information from the debtor indicating nonexistence ofthe alleged debt. 5. Making any statement in any letter, form or notice to alleged delinquent debtors which is inconsistent with, negates or contradicts the affirmative disclosure required by Paragraph Four. 6. Placing in the hands of others the means and instrumentaliies to represent any of the matters prohibited in Paragraph Three or which fail to comply with the requirements of Paragraph Four or Five of this order.

It is further ordered That the respondent shall distribute a copy of this order to each of its operating divisions or departments and to each of its present and future partners, officers, agents, representatives, or for sale, sale oremployees engaged in any aspect of the offering distribution of any service or printed matter for use in the collection, or attempting to collect, or assisting in the collection of or inducing or and that attempting to induce the payment of alleged delinquent debts, said respondent secure a signed statement acknowledging receipt of said order from each such person.

It is ji1rther ordered That the respondents notify the Commission at least thirty (30) days prior to any proposed change in the partnership respondent such as dissolution, assignment or sale resulting in the emergence of a successor partnership, the creation or dissolution of CONTINENTAL COLLECTION SERVICE , ET AL. 589 5R2 Decision and Order subsidiaries or any other change in the partnership which may affect compliance obligations arising out of the order. It is further ordered That the individual respondents named herein promptly notify the Commission of the discontinuance of their employment with Continental Collection Service and of their affiliation with a new business or employment. In addition, the individual respondents named herein shall promptly notify the Commission of their affiliation with a new business or employment whose principal activities include the offering for sale, sale or distribution of any service or printed matter for use in the collection, or attempting to collect, or assisting in the collection of or inducing or attempting to induce, the payment of alleged delinquent debts, or of their affiliation with a new business or employment in which their own duties and responsibilities involve the offering for sale, sale or distribution of any service or printed matter for use in the collection, or attempting to collect, or assisting in the collection of or inducing or attempting to induce, the payment of alleged delinquent debts. Such notice shall include respondents' current business address and a statement as to the nature of the business or employment in which they are engaged as well as a description of their duties and responsibilities. It is further ordered That individual respondents named herein shall within sixty (60) days after service upon them of this order, fie with the Commission a report, in writing, signed by the respondents, setting forth in detail the manner and form in which they have complied with this order.

590 FEDERAL TRAm': COMMISSIO:- DECISIONS Order 87 FTC.