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"
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