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Canoga Park, California-based D.C. Credit Services, Inc. and company co-owner, David Cohen, have agreed to pay a $300,000 civil penalty as part of a settlement of Â鶹´«Ã½ Trade Commission charges that they violated the Fair Credit Reporting Act (FCRA) and the Fair Debt Collection Practices Act (FDCPA). In addition to requiring the civil penalty, the consent decree to settle the charges would permanently ban defendant David Cohen from engaging in debt collection activity.

The settlement also would require the defendants to notify consumer reporting agencies (often called "credit bureaus") to delete all adverse information the defendants previously had furnished to them over the past seven years. The consent decree would permit the defendants to re-report such adverse information only if, upon proper examination, they determine that the adverse information is accurate and reportable.

The 1997 amendments to the FCRA for the first time imposed legal duties on debt collectors, and others that furnish information to credit bureaus, regarding the accuracy of that information. According to the FTC's complaint, D.C. Credit Services and Cohen violated the FCRA by:

• Furnishing information to a consumer reporting agency when they knew or consciously avoided knowing that the information was inaccurate;
• Failing to notify promptly a consumer reporting agency that previously-furnished information is incomplete or inaccurate, after defendants had so determined;
• Furnishing adverse information to consumer reporting agencies without disclosing that the consumer previously had disputed the information being reported; and
• Falsely reporting the date of delinquency of a debt.

Further, according to the FTC's complaint, in connection with the collection of debts, the defendants violated the FDCPA by:

• Using language the natural consequence of which is to harass, oppress, or abuse consumers;
• Communicating, and threatening to communicate, adverse credit information that the defendants knew or should have known was false; and
• Furnishing adverse information to consumer reporting agencies without disclosing that the consumer had previously disputed the information being reported.

Both D.C. Credit Services and David Cohen had previously executed consent decrees in 1992, relating to violations of the FDCPA.

In addition to requiring payment of the $300,000 civil penalty, the consent decree prohibits the conduct alleged in the complaint, prohibits other violations of the FCRA or FDCPA, bans defendant David Cohen from future debt collection activity, and includes provisions designed to correct inaccurate information previously reported to consumer reporting agencies by D.C. Credit Services.

The decree provides for a complete and permanent occupational ban on David Cohen's involvement in debt collection, to become effective on October 1, 2002. Until that time, the decree provides that Cohen must cease having personal contact with consumers in connection with debt collection by D.C. Credit Services.

Further, the decree requires the defendants to remove all adverse credit information they reported to consumer reporting agencies for the past seven years. The decree permits the defendants to re-furnish adverse information, but only after re-examination under the standards prescribed by the FCRA and FDCPA.

Finally, the decree contains a number of record-keeping and reporting requirements to assist the FTC in monitoring the defendants' compliance with the terms of the settlement.

The Commission voted 4-0 to refer the complaint and the proposed consent decree to the Department of Justice, with Commissioner Thomas B. Leary not participating. The complaint and consent decree were filed by DOJ on behalf of the FTC in the U.S. District Court for the Central District of California, Western Division, on June 27, 2002. The FTC's Western Region Office conducted the investigation in this matter. The FTC received assistance in this case from the Better Business Bureau of the Southland, Colton, California.

NOTE: This consent decree is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent decrees are subject to approval of the court and have the force of law when signed by the judge.

Copies of the complaint and consent decree are available from the FTC's Web site at and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at . The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC Matter No. 992 3086)
(Civil Action No. 02-5115 MMM (FMOx))