Local debt collector agrees to settle FTC lawsuit

A large Houston-based debt collector accused of using unscrupulous tactics to collect federal student loans and other debts will pay $700,000 to settle a civil lawsuit filed on behalf of the Federal Trade Commission.

GC Services agreed to the settlement the same day it was sued in Houston federal court by U.S. Attorney Kenneth Magidson over allegations that it violated federal laws governing debt collection practices, authorities said. GC Services, which neither admitted nor denied the allegations, declined to comment.

The lawsuit, which accused GC Services of hounding consumers who didn't owe money and disclosing debts to third parties, is the latest case the FTC has brought on behalf of consumers who have filed complaints about debt collection efforts. The commission typically logs more complaints about debt collectors than any other category of consumer complaints, according to the agency's most recent annual report.

Last year, the agency received 898,000 collection complaints, nearly twice as many as identity theft and a third of all consumer complaints filed with the FTC.

The surge of complaints comes as student loan debt is a growing segment of the collection business. More than 40 million consumers carry student loan debt, with an average balance of $29,000, the FTC said.

Companies like GC Services are hired by lenders to collect debts. GC Services clients include banks, telecommunication companies, utilities and government agencies, according to the lawsuit.

GC Services collected $1.2 billion from consumers in 2014, according to the lawsuit. The company, located on Gulfton Street in Houston, has about 1,400 employees who work in debt collection.

The federal government's complaint against GC Services alleged that the company's collectors left phone messages that improperly disclosed the debts to third parties without the permission of the debt holders, a violation of federal law. In some cases, according to the complaint, collectors left messages about unpaid bills on voice mail systems and answering machines.

Collectors from GC Services also called consumers repeatedly, despite being told that the collection agency had reached the wrong person or that person answering the phone did not know the whereabouts of the debtor.

Debt collectors buy data bases of phone numbers to find people, but the data bases typically include phone numbers of former roommates, former spouses and former neighbors, said Dana Karni, a Houston consumer lawyer.

It becomes harassment when a collector continues to call an ex-mother-in-law or a new user of the phone number, Karni said.