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No Admission of Wrongdoing by Fined Debt Collector

David Callahan

Late last year, a federal judge overturned an SEC settlement with Citigroup in which the company was fined over $200 million for financial misconduct -- yet admitted no wrongdoing. The judge criticized the longstanding practice of allowing for no admission of guilt -- a staple of nearly all government settlements with corporations and banks over the past decade.

The practice has long bugged me, too. After all, how is it that crimes clearly occur -- to the point that millions are paid out in fines -- and yet no individual is held responsible and no one admits doing anything wrong? These settlements epitomize a double standard around personal responsibility: Two million people sit in America's jails and prisons amid a historic crackdown on crime, yet executives who have orchestrated major white collar crimes aren't even forced to admit they did wrong, much less face personal punishment.

Not long after the judge's ruling, the SEC said it was changing its policy on settlements and taking a tougher stance on admission of wrongdoing in some cases.

Unfortunately, business continues as usual in other enforcement arms of the federal government. Case in point is yesterday's settlement by the FTC with Asset Acceptance, a debt collection agency that will pay $2.5 million. Although the company was charged with nine separate complaints -- like "using illegal debt-collection practices, including misrepresenting the character, amount, or legal status of a debt; providing inaccurate information to credit reporting agencies; and making false representations to collect a debt" -- the company did not admit to wrongdoing. (It did promise to change its debt collection practices, though.)

Among other things, Asset Acceptance broke the law when it called third parties -- like employers -- to try to collect debts. Imagine that: some debt collector calling your boss or a relative about your debt.

In a statement, the company's president, Rion Needs, said "We are pleased to have this matter behind us, and to have clarity on the FTC's policies and expectations of the debt collection industry."

The dismissive tone here is standard for these settlements: Oh, it was all just a misunderstanding between our company and federal regulators enforcing complicated rules.

So not only do these settlements not force admission of guilt, they leave the door open for companies to actively deny that they did anything wrong. One other thing about the settlement: $2.5 million is hardly a lot money given the profits that can be made in the debt collection industry. And that fine may well be paid out over an extended period of time, as is common in these cases.

The FTC investigated Asset Acceptance for six years, laboriously putting together a case. If this is the toughest settlement they can get, one thing seems certain: Debt collection abuses won't stop.