Debt collector settles charges for $1.3 million-LTD COLLECTIONS- POSTED BY Robert Paisola

Robert Paisola, CEO, Western Capital

We Did it Again! LTD Financial Services Pays 1.3 Million to client!

By BARRY SHLACHTER

Star-Telegram Staff Writer

A Texas debt collector agreed to pay $1.3 million in civil penalties to settle charges by the Federal Trade Commission that it misled, threatened and harassed consumers nationwide, sometimes using racial slurs and profanity, the FTC said Tuesday.

Houston-based LTD Financial Services, which worked with major credit-card companies and retail chains, admitted no wrongdoing and settled only to avoid a costly legal battle, said Leonard Pruzansky, LTD's chairman, who was named in the settlement along with Chief Executive Timothy Feldman and two top collection managers.

"We believe it's a fairly precedent-setting case," said Tom Carter, an FTC attorney in Dallas. It was the commission's largest cash settlement in a debt-collection action that did not involve more serious charges and the first to name key company officials instead of just the corporation, he said.

Using both English and Spanish, LTD collectors threatened to have a consumer's pay garnisheed, which can't be done without a trial, Carter said. When managers did uncover illegal practices, like informing relatives and co-workers of debts, they either participated or failed to discipline employees.

The case was helped by consumers who taped calls and by LTD's recordings, some of which revealed racial slurs, Carter said.

Pruzansky said, "We monitor our calls, and I can't imagine that instances of racial slurs were valid."

The case stemmed from thousands of complaints filed by consumers with the FTC, the Houston Better Business Bureau and state attorneys general, the FTC said.

But Carol Ritter, the Houston BBB's vice president of operations, said LTD either resolved complaints or sent the problem back to creditors. LTD joined the BBB in 1995, a year after the company was founded.

"I would say we are surprised," Ritter said. The BBB did not count LTD among the industry's worst offenders. "They appeared to be doing everything correctly," Ritter said. "We've seen some agencies in town that were just horrendous."

Nonetheless, the Houston BBB will consider whether LTD should be expelled in light of the federal action, Ritter said.

LTD questioned why the case was pursued even though consumer complaints dropped 33 percent last year from 2005. And its rate of complaint per consumer contact was lower than most of its competitors', the company said, citing FTC data received through a Freedom of Information Act request.

"We continue to be puzzled about why we were chosen for investigation," a company statement said. But LTD took the federal action seriously enough to enhance training. "One complaint is one too many," it said.