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“Final notice before arrest,” the scary mailings reportedly read. “A Warrant round-up is coming.”

The notices threatened recipients with “arrest at your home or office,” or “jail confinement for a considerable amount of time.”

The postcards and letters, sent by a Dallas-based collection agency calling itself “Warrant Enforcement Division,” also broke the law, the Federal Trade Commission said. The firm behind them, Municipal Recovery Services Corporation, settled allegations recently and agreed to pay a fine. The case highlights a recent roundup of debt collection settlements and actions announced by both the Federal Trade Commission and the Consumer Financial Protection Bureau.

Settling a case that Credit.com first described as part of our Debt Collection Files series back in 2014, the CFPB also announced recently that it had settled with Georgia-based debt collection law firm Frederick J. Hanna & Associates. The CFPB described the firm as an “illegal debt collection lawsuit mill.” Hann & Associates intimidated consumers with deceptive court filings when it didn’t have necessary documentation to support debt claims and relied on faulty evidence to churn out lawsuits, the agency said.

“This process allowed the firm to generate and file hundreds of thousands of lawsuits,” the CFPB wrote in a press release. “One attorney at the firm, for example, signed over 130,000 debt collection lawsuits over a two-year period.”

The firm frequently dismissed cases when challenged, dismissing 40,000 suits in Georgia between 2009 and 2014, the CFPB said.

Hanna denies it engaged in any wrongdoing.

“(Hanna) entered into the settlement agreement not only to halt the relentless expense and uncertainty of protracted litigation with the Bureau, but also with the sincere hope that the requirements set forth in the Settlement Agreement will assist attorneys in reconciling the nebulous principle of ‘meaningful attorney involvement,’” the firm said in a statement. “In spite of the Bureau’s allegations about our firm, we did not institute any pattern or practice with the intent to deceive or harm consumers.”

Hanna will pay a $3.1 million civil penalty if a federal court judge approves the settlement agreement.

Operation Collection Protection Continues 

The Municipal Recovery case was announced as part of a continuing enforcement sweep by the FTC called Operation Collection Protection. It now includes 130 cases.

Municipal Recovery is essentially a one-person shop, the FTC said in a press release, with owner Marcos Nieto engaging in third-party debt collection of past-due municipal utility bills, traffic tickets, fines and other debts owed to municipalities in Texas and Oklahoma.

The firm said it was unable to comment on the case.

One typical letter from the firm said that “WARRANT OFFICERS HAVE BEEN GIVEN YOUR CURRENT ADDRESS,” the FTC said. “The defendants also mailed postcards to collect on past-due utility bills, stating “PAY YOUR FINE NOW—AVOID GOING TO JAIL.’”

The firm failed to inform consumers of the amount of the debt and the creditor’s name, and their right to dispute the debt, as required by the Fair Debt Collection Practices Act (FDCPA), the FTC said.

A permanent injunction bars the firm from making misrepresentations while collecting debts, including claims that failure to pay will result in arrest, car impounding or inability to renew a driver’s license. The firm also faces a near-$195,000 penalty that was suspended by the court because the collection firm cannot pay it, the FTC said.

“The full judgment will become due immediately if the defendants are found to have misrepresented their financial condition,” according to the agency.

The FTC’s Operation Collection Protection is ongoing.

Dealing With Debt Collectors

Consumers who find themselves on the receiving end of a debt collection phone call should familiarize themselves with their rights under FDCPA. For instance, while legitimate debt collectors can attempt to collect on what they owe, they are prohibited from utilizing certain means, like making early morning or late night calls, verbal abuse and dire threats, to do so.

If you are contacted about a debt, you can ask for written verification to help determine its legitimacy. You can also check to see if the account appears on your credit report and how it may be affecting your credit score. (You can pull your credit reports for free each year at AnnualCreditReport.com and viewing your credit scores for free each month on Credit.com.)

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