Full opinion text
MEMORANDUM OPINION BUCHMEYER, District Judge. This opinion concerns serious violations of almost every prohibition in the Fair Debt Collection Practices Act, 15 U.S.C. § 1692. It constitutes this Court’s findings of fact and conclusions of law under Rule 52(a), Fed.R.Civ.P. 1. Introduction The government charges that the defendant, Central Adjustment Bureau, Inc. (“CAB”), has consistently and repeatedly violated the Fair Debt Collections Practices Act, 15 U.S.C. § 1692. The defendant denies these charges. Two trials were held. The first was limited to evidence concerning the defendant’s headquarters and its regional collection office in Dallas. The second was limited to the six regional collection offices discussed in Appendix A to this opinion. At the request of the defendant, which complained bitterly about the expense of this litigation, the government’s discovery —and, thus, its evidence at the two trials— was limited to the defendant’s headquarters and to a representative number of the defendant’s 26 regional collection offices. And, also at the instance of the defendant, the number of depositions which the government was permitted to take in each region was limited. See, e.g., Appendix B, 412. However, again at the defendant’s request, this Court denied the government’s motion to resolve this matter “on the papers” before the second trial— because it was necessary for this Court to judge the credibility of the witnesses (primarily debtors, present employees of the defendant, and ex-Central Adjustment Bureau employees), who gave dramatically conflicting testimony. In making the credibility findings concerning the witnesses whose testimony was presented at both trials — which are recited in Appendix A (387-398) and in Appendix B (403-408). This Court considered all of the circumstances under which the witness testified: the demeanor of the witness in court or as revealed in the deposition; whether the witness had some personal interest in the outcome of the case; whether the testimony was inconsistent, or whether it was supported or contradicted by other credible evidence; whether the witness was impeached concerning some material matter. This Court has not automatically credited the witnesses for the government and discredited those of the defendant. Indeed, at the first trial, several of the witnesses for both parties were discredited (Appendix A, 403-408). However, at the second trial, the government’s choice of witnesses was obviously affected by the Court’s credibility choices at the first trial; accordingly, Appendix A credits the testimony of more government witnesses, and discredits the testimony of more of the defendant’s witnesses, than was done in after the first trial (as reflected in Appendix B). This opinion incorporates the stipulations of facts presented by the parties at both trials. It also includes (i) as Appendix A, the credibility findings concerning the evidence at the second trial; and (ii) as Appendix B, the oral findings of fact and conclusions of law (and credibility choices) delivered in open court after the conclusion of the first trial. II. Applicable Legal Standard Under the Fair Debt Collection Practices Act, the test is not whether “a reasonable consumer” would be deceived, misled or harrassed by the prohibited practices — because the Act is intended to protect “unsophisticated consumers.” Therefore, this Court must look not only at the “reasonable consumer,” but also to a less sophisticated consumer in determining whether the debt collection practices act has a tendency or capacity to deceive. Jeter v. Credit Bureau, 760 F.2d 1168, 1172-73 (11th Cir.1985); Baker v. G.C. Services, 677 F.2d 775, 778 (9th Cir.1982). See also Bingham v. Collection Bureau, Inc., 505 F.Supp. 864, 870 (N.D.Dak.1981); Wright v. Credit Bureau of Georgia, Inc., 548 F.Supp. 591, 599 (N.D.Ga.1982), reconsidered, 555 F.Supp. 1005, 1007 (N.D.Ga.1983); Rutyna v. Collections Accounts Terminal, Inc., 478 F.Supp. 980, 982 (N.D.Ill. 1979). Contra Blackwell v. Professional Business Services of Georgia, 526 F.Supp. 535, 537-538 (N.D.Ga.1981). III. Telephone Violations The government did prove by a preponderance of the evidence the use of “abusive, deceptive and unfair debt collection practices” by the defendant and many of its debt collectors (including some of the supervisors and managers in the defendant’s regional collection offices). This evidence, which is summarized in Appendix A (offices besides Dallas) and in Appendix B (Dallas office), shows that the defendant has — as alleged by the government — engaged “in consistent and widespread abuse of consumers in direct violation of the Fair Debt Collection Practices Act.” Specifically, the defendant CAB and its debt collectors in various regional offices consistently and repeatedly violated the Fair Debt Collections Practices Act: ... by making telephone calls to debtors at inconvenient times, before 8:00 a.m. and after 9:00 p.m. [§ 805(a)(1) ]; ... by making calls to the debtor’s place of employment after being told not to do so by the debtor or the employer [§ 805(a)(3)]; ... by contacting third parties about the debt without the consent of the debt- or [§ 805(b) and § 804]; ... by making harrassing and abusive telephone calls to debtors and relatives, including the use of racial slurs, belligerent threats, and terms like “liar, deadbeat, crook,” etc. [§ 806]; ... by using obscene and profane language in collection calls, including the terms “god-damn liar, low-down son of a bitch, shit, the judge doesn’t give a fuck about your complaint, hell, shit, and asshole” [§ 806(2)]; ... by making repeated phone calls to debtors, as many as 4-5 calls or more to the same debtor in a single day [§ 806(5)]; ... by making false representations designed to make the debtor believe that the caller was an attorney [§ 807(3)]; ... by making false representations that the debtor would be arrested or jailed, or that the debtor’s property would be seized or garnished to pay the debt [§ 807(4)]; ... by threatening to sue or take other action which was not intended because the CAB clients had not authorized the filing of any lawsuit [§ 807(5) ]; ... by falsely representing that the debtors were guilty of crimes and would go to jail because debts were not paid [§ 807(7)]; ... by using false and deceptive means to collect debts [§ 807(10)], such as defrauding a debtor’s mother by convincing her that the daughter’s college grades would be revoked — and her degree would be cancelled — if the mother did not immediately pay a $400 debt owed to a college. (Appendix A, 393); ... by soliciting post-dated checks with the purpose of threatening criminal prosecution [§ 808(3)]; and ... by failing to validate the accuracy of the claim or by continuing collection efforts after receiving written notice that the debt had been paid or was disputed [§ 809]. More particularly, the evidence summarized in Appendix A and Appendix B — including the testimony of debtors and of ex-employees of the defendant, and the exhibits — established the following violations of the Fair Debt Collection Practices Act: § 805(a)(1) — Inconvenient Calls: violations in the Atlanta, Boston, Richmond and Seattle offices (see Appendix A); violations as to Dallas office (Appendix B, 405 and 407). § 805(a)(3) — Calls to Place of Employment: violations as to Atlanta, Louisville, Boston, Richmond and Seattle offices (see Appendix A); violations as to Dallas office (Appendix B, 404-405). § 805(b) — Communications With Third Parties: violations as to Atlanta, Louisville, Boston, Richmond and Seattle offices (see Appendix A); violations as to Dallas office (Appendix B, 404-405). § 804 — Location Information: violations as to Atlanta, Louisville, Boston, Richmond and Seattle offices (see Appendix A under sections titled “§ 805(b)— Communications With Third Parties”); violations as to Dallas office (Appendix B, 404-405). § 806 — Harrassment or Abuse: violations as to Atlanta, Louisville, Boston, Richmond, and Seattle offices (see Appendix A); violations as to Dallas office (Appendix B, 404-405, 406, 407). § 806(2) — Obscene or Profane Language: violations as to Atlanta, Louisville, Boston, Richmond and Seattle offices (see Appendix A); violations as to Dallas office (Appendix B, 403-404, 406-407). § 806(5) — Repeated or Continuous Telephone Calls: violations as to Atlanta, Louisville, Boston, Richmond and Seattle offices (see Appendix A); violations as to Dallas office (Appendix B, 405, 407). § 807(3) — Representation As An Attorney: violations as to Atlanta, Louisville, Richmond and Seattle offices (see Appendix A); no violations found as to Dallas office (Appendix B, 406-407). § 807(4) — Threat of Arrest or Imprisonment or Garnishment: violations as to Atlanta, Louisville, Boston, Richmond and Seattle offices (see Appendix A); no violations as to Dallas office (Appendix B, 406-407). § 807(5) — Threat to Take Unintended Action: violations as to Atlanta, Louisville, Boston, Richmond, Seattle and Cleveland offices (see Appendix A); violations as to Dallas office (Appendix B, 404-405, 405-406). § 807(7) — Representations of Debtor Crime: violations as to Louisville, Boston, Richmond and Seattle offices (see Appendix A); violations as to Dallas office (Appendix B, 404). § 807(10) — Deceptive Means to Collect Debt: violations as to Atlanta, Louisville, Boston, Richmond and Seattle offices (see Appendix A); violations as to Dallas office (Appendix B, 404, 407). § 808(3) — Solicitation of Post-Dated Checks: violations as to Atlanta, Louisville, Richmond and Seattle offices (see Appendix A); no violations as to Dallas office (Appendix B, 406-407). § 809 — Validation of Debts: violations as to Richmond and Seattle offices (see Appendix A); violations as to Dallas office (Appendix B, 404, 405, 407). In addition, the evidence established “single-office” violations as to § 808(1) — Collection of Interest or Incidental Charges (Boston office); § 808(2) — Failure to Give Notice of Deposit of Post-Dated Check (Richmond office); § 808(4) — Early Deposit of Post-Dated Check (Richmond office); and § 806(6) — Calls Without Meaningful Disclosure of Identity (Seattle office). IV. Training, Discipline, Response to Debtor Complaints At the conclusion of the first trial, this Court credited the defendant’s evidence that “there is no bad faith on the part of the defendant, that they [company management] have taken efforts to comply with the Act.” (Appendix B, 408.) This was based upon testimony and exhibits concerning a training program for new collectors about the Fair Debt Collection Practices Act, a policy that collectors had to sign a form agreeing to comply with the Act, etc. However, these findings were wrong. At the second trial, the government established — through credible testimony of ex-employees — that the CAB “training program,” except on paper, was really nonexistent or ineffective in the regional offices. See Appendix A, 392, 395-396. For example, an ex-employee in the Seattle office (Train) testified that the “test” given to new collectors on the Act was a facade because the general manager of that office actually gave the new employees the correct answers, telling them “to miss a few so it would look legitimate.” In addition, the government proved that the supervisors in the various regional offices knew that debt collectors were violating the Act, but did nothing to stop it. See Appendix A, 390, 392, 395-396. In fact, the evidence even established that some of the CAB supervisors even participated in many of the violations summarized above. For example, a supervisor in Richmond, in making a collection call, told the female debtor she had better “strap a mattress to her back and hit the street” to make money through prostitution to pay her debt. Appendix A, 393. Indeed, testimony of ex-employees established that this supervisor was actually one of the worst violators of the Act in that office. See also Appendix A, 391-392, 396. This Court’s conclusion after the first trial, that only isolated instances of telephone violations had taken place, was dispelled by the evidence at the second trial. Yet, despite this pervasive practice of violations in the regional office, not a single employee has ever been disciplined by the defendant for violations of the Act. After the Dallas trial on August 9, 1984, this Court expressed concern over the total absence of any discipline — noting that something should have been done against the “bad apples” that CAB was bound to have, particularly in view of the turnover in debt collectors (Appendix B, 408-409). Yet, by the second trial over one year later, the defendant still had not fired or reprimanded a single debt collector for violations of the Act. See Appendix A, 388, 390, 392 -393, 394, 395-396, 397-398. Indeed, the government even proved that the defendant had — instead of disciplining — actually promoted some of the debt collectors who were the most persistent violators. See Appendix A, 15 (Semore and Day in Richmond); 24-26 (Talley in Seattle). Finally, the evidence was overwhelming that it did absolutely no good for a debtor to complain to the defendant about improper conduct by a CAB debt collector. Often the debtors were not even permitted to talk to the managers of the regional offices; and, when they were, they may have been complaining to one of the supervisors who were actually participating in — or doing nothing to stop — violations of the Act. See Appendix A, 388, 390, 392-393, 394, 395-396, 397-398. In most instances, it was only after a debtor complained to some state agency that the complaint was sent to the defendant’s headquarters in Dallas. Yet, even then, the only response by the defendant to these debtor complaints was that the collectors had done nothing wrong — and the defendant’s attorney sent an unbroken string of letters to various state agencies advising them that, upon the basis of his investigation, the debtor’s complaint was totally unfounded and that he found no violations of the Fair Debt Collections Practices Act. See, e.g., Govt. Exh. A-162 (the Grass complaint in Seattle); Govt. Exh. A-157 (the Oxley complaint in Seattle); Govt. Exh. A-222 (the Watts complaint in Richmond); Govt. Exh. A-125 (the Lariviere complaint in Boston); Govt. Exh. A-81 (the Williams complaint in Boston); Govt. Exh. A-185 (the West complaint in Louisville). V. Form Letter Violations This court’s findings concerning the defendant’s violations of the Act by the form “dunning” letters which it uses — and which are basically the same throughout its operations (with the exceptions of “attorney letters”) — are summarized in Appendix B, 398-403. As stated (footnote 3), the findings concerning the “CABCO-1” letter was wrong. Considering the proper legal standard, the “less sophisticated consumer” would understand this letter to be the threat of a lawsuit. See Jeter v. Credit Bureau, 760 F.2d at 1172-73. And, just as in the case with the “CABCO-2” letter, there is no intent by the defendant or its customer to actually file suit when it is sent. Consequently, the “CABCO-1” form letter violates §§ 807(5). See Appendix B, 401-402. Following the first trial, the parties were not able to agree upon revisions to the defendant’s form letters. Proposed revisions were submitted to the Court by the defendant, and the government responded to those proposals and filed a motion for reconsideration of certain of this Court’s findings. These matters are disposed of in the following manner: CABCO-2: The defendant — in response to this Court’s comments that the violation could be corrected by revision or by the addition of a disclaimer (Appendix B, 398-399) — proposes to leave the form unrevised, but this disclaimer: “We do not mean to represent directly ■ or indirectly that legal action has been, is being, or will be taken against you. We would, however, prefer that the money which is due be paid without necessity of further processing by us.” Upon reflection, the Court concludes that this proposed revision is not adequate. As the government correctly argues, the disclaimer — in this context (unlike that in the Phoenix case) — “reinforces the body of the dunning letter, which is violative because it indicates that suit may be filed.” Consequently, the two offending paragraphs in CABCO-2 must be revised in order to comply with the Act. See Chrysler Corp. v. FTC, 561 F.2d 357, 363 (D.C.Cir.1977). J-2 letter: The government’s motion for reconsideration is denied. As stated in Appendix B(399), this letter does not contain a threat to sue, nor is it a threat to make improper contacts with third parties in violation of the Act. J-4 letter: For the reasons stated as to the CABCO-2 letter, the proposed revision of the “Preparatory Listing For Referral to Attorney’’ letter — by the simple addition of the “Phoenix disclaimer” — is not sufficient. The form must be revised in order to comply with the Act. BP-1 letter: The proposed revision of this letter corrects the problem, and it is acceptable to the government. T-3 letter: This letter (Govt. Exh. 173) is a card which states: “URGENT CALL WITHIN 48 HOURS 214/638-5600 DALLAS, TEXAS CALL COLLECT.” Although the use of these forms was discontinued before trial, the evidence did establish that the defendant did send these forms to consumers after the Act went into effect. § 807(11) requires a debt collector to clearly indicate in any communication with the debtor that he is attempting to collect a debt. Government’s Exhibit 173 violates the Act, therefore, because it fails to disclose that it was being sent by CAB in an effort to collect a debt. VI. Attorney Letters With the exception of the Richmond office, each of the CAB collection offices maintains copies of form “attorney letters,” which bear the letterhead of an attorney and have a place for the attorney’s signature. The use of these attorney letters may differ somewhat in each of the CAB collection offices, but in each office the collector initially decides when an attorney letter should be sent and has a typist fill in the form with the name and address of the debtor, the amount of the debt, and the name of the client. § 803(6)(F) excludes, from the definition of “debt collectors” subject to the Fair Debt Collection Practices Act, “an attorney-at-law collecting a debt as an attorney on behalf of and in the name of a client.” Following the first trial, this Court concluded that — although the “attorney letters” of T.K. Bamford, a Dallas attorney, did constitute a threat of unintended action, a lawsuit (see Govt. Exhs. 25, 26, 27) — they were exempt from the Act by § 803(6)(F). (See Appendix B, 400-402.) The evidence presented at the second trial, and the government’s motion for reconsideration, require a re-examination of the matter of the “attorney letters” used by the defendant. (a) Controlling Principles The analysis required must consider both the ethical obligations of the attorney and the limitations placed upon collection agencies by the Fair Debt Collection Practices Act. The controlling principles, therefore, are these: (1) It is unethical for an attorney to permit a collection agency to prepare and mail dunning letters using the attorney’s stationery. ABA Ethics Opinion No. 253 (June 1943); Texas Ethics Opinion No. 160 (Sept. 1957). It is also unethical for an attorney — without more — to sign and send collection letters which have been prepared and sent to his office by the collection agency. ABA Ethics Op. No. 253 (June 1943); Texas Ethics Op. No. 160 (Sept. 1957). Obviously, letters of this nature would not be exempt from the Act under § 803(6)(F). (2) What is required by the canons of ethics is that the matter be referred to the attorney and that he have the authorization to represent the individual creditor— not the collection agency — with respect to each matter. This is also required by the explicit language of § 803(6)(F). Specifically: (i) The account must have been actually referred to the attorney for collection. ABA Ethics Op. No. 253 (June 1943); Texas Ethics Op. No. 161 (Sept. 1957); Phil.Ethics Op. No. 61-8 (Dec. 1961). (ii) The attorney must have the authorization of the individual creditor to represent it in the collection matter. Phil. Ethics Op. No. 61-8 (Dec. 1961). ... this authorization can be obtained from the creditor by the collection agency on behalf of the attorney. N.Y. City Ethics Op. No. 153 (1930). But cf. Wisc.Bar Ethics Op. No. 11 (1961). ... this may be done orally by the collection agency, but the attorney risks unethical conduct if there is not some written evidence of the authority (either from the client or by a confirming letter from the collection agency). See Phil.Ethics Op. No. 61-8 (Dec. 1961); Alleg.County Ethics Op. No. 1962-71; Wisc.Bar Ethics Op. No. 11 (1961). ... this authorization could be one which merely permits the attorney to send collection letters, but which does not permit the filing of suit without further authorization by the creditor. N.Y. City Ethics Op. No. 153 (1930); Phil.Ethics Op. No. 61-8 (1961); Alleg. County Ethics Op. No. 1963-2. (iii) The attorney must have sufficient information to satisfy himself that it is proper to send the dunning letter, i.e., he must investigate the merits of the claim before making a demand for payment. Alleg.County Ethics Op. No. 1962-1, 1963-2; ABA Ethics Op. No. 253 (June 1943); Texas Ethics Op. No. 160 (Sept. 1957). This means that a mere list of names of debtors, amounts of debts, etc. is not sufficient; the attorney must have the file for review to determine the merits of the claim, as well as the limits of his authority. Alleg.County Ethics Op. No. 1963-2. (iv) There is nothing wrong with the use of form letters, whether prepared by the collection agency or by the attorney. Phil.Ethics Op. No. 61-8 (Dec. 1961); Al-leg.County Ethics Op. No. 1962-1. However, the letters must be signed and mailed by the attorney from his office, not by the collection agency. N.C.Ethics Op. No. 487 (July 1985); Phil.Ethics Op. No. 61-8 (Dec. 1961); N.Y. City Ethics Op. No. 866 (Jan. 1965). (3) Although no ethics opinions specifically address the effect of further collection efforts by the collection agency after the matter is referred to the attorney, it is obvious: (i) That if the attorney merely refers telephone calls or letters from debtors to the collection agency, the matter would not — in fact — have been referred to the attorney. It would, therefore, be unethical for the attorney to have sent the dunning letters and they would not be exempt under § 803(6)(F). (ii) If the collector “makes the decision” as to when subsequent attorney letters should be sent, this also indicates that the matter has not — in fact — been referred to the attorney. (iii) In addition, if the attorney does not handle the telephone calls and correspondence from the debtors, and if he does make the determinations about what should be done in the file, this certainly indicates that the attorney is really representing the collection agency — and that he has no authorization to represent individual creditors. See Wash.Ethics Op. No. 84 (Dec. 1960); N.Y. County Ethics Op. No. 300 (1932). This would mean, just as the government argues, that the attorney is not “acting as an attorney for the creditor, ” but is “merely an extension of the CAB collection process, and his activities do not exempt” the defendant. (4) Moreover, the conduct of the debt collector after a supposed “referral” — as distinguished from that of the attorney — is not exempt from the Act under § 803(6)(F). Therefore, if a collector threatens suit in his activities after an “attorney letter” has been sent, there is a violation of the Act. As the government argues, if this were not so, a collection agency could avoid the Act simply by “referring” the file to an attorney while continuing collection efforts as to that account. (b) Application to Present Case Applying these principles, the Court still concludes that the activities of T.K. Bamford, the Dallas attorney, were exempt under § 803(6)(F). Bamford did have oral or written authority from the creditors to send collection letters; that he did not merely “loan his letterhead” to the defendant, but conducted at least a spot check of the files referred to him; and that all of the letters were signed and mailed from his office. However, the evidence concerning any further collection efforts by the defendant’s employees on the accounts referred to Bamford was not well-developed at the first trial, no doubt because this issue was not defined until after this Court’s ruling. The government now argues that there was “ample evidence [to show] that collectors continued to telephone the debtor and ‘work’ the account” after the first Bamford letter — and that, because of this, “Bamford’s involvement is merely a part of the total collection efforts of” CAB, and not exempt under § 803(6)(F). It is unnecessary to address that argument, however, because the government’s evidence at the second trial established flagrant violations of the Act by the defendant in connection with “attorney letters” in other areas. For example, in the Boston office, the general manager testified that he approved the first attorney letter; that the typed letters were then stamped with the attorney’s signature and mailed from the Boston collection office of CAB; and that the attorney was sent only a listing of the accounts in which an attorney letter had been mailed with the name of the debtor, the client and the amount owed. Clearly, under the principles stated above, these accounts had not been referred to the attorney, and the letters were simply part of the collection efforts of CAB. As the government argues: “[Once an attorney letter is mailed] and thereafter a CAB collector telephones the consumer, the consumer will naturally discuss that debt with the collector in a context where a threat to file suit had been previously made and received by the consumer. Decisions and collection activities continue to be made by CAB relative to collecting the debt after the first attorney letter is sent. The intertwining of the collection activities of [the attorney] and those of the CAB collector means, in essence, that the threat to file suit is being made by [the attorney] on behalf of CAB. The collection activities that are exempted by the statute, however, are those of the attorney — not the collection activities of CAB. To hold that [an attorney] may threaten to file suit in a letter signed by [the attorney] that will benefit CAB in subsequent contacts with the debtor clearly subverts the purpose of the Fair Debt Collection Practices Act.” Similarly, the general manager of the Atlanta office (James Harris) testified that no debtor files were ever forwarded to the attorney; that the attorney merely received a listing of the name of the debtor and the creditor and the amount due; and that “he comes by the CAB office, reviews the attorney letters, and then mails them” without any other information. The testimony of Harris also established that the defendant’s collectors continued their collection efforts on the accounts “referred” to the attorney. Indeed, if the attorney ever got a call from the debtor, he could only refer it to the debt collector because he had no file jacket and no information on the account. Harris also testified, not too surprisingly, that the attorney represented “both CAB and the creditors.” Finally, the evidence established that in the defendant’s Seattle office the accounts were not in fact referred to the attorney; that the collectors decided when the first attorney letter should be sent; that the attorney never took any of the account jackets; that the collectors continued their efforts after the supposed “referral” to the attorney; and that the attorney would refer calls from the debtors to the collectors. Accordingly, under this evidence, the government has shown consistent and widespread violations of the Act by the defendant in connection with the attorney letters — which make threats of suit, without any authorization to file suit from the client, and with no legitimate exemption under § 803(6)(F). See Appendix B, 401-402. VII. Relief (a) Scope of Relief The evidence shows a widespread pattern of violations of the Fair Debt Collection Practices Act by the defendant’s collectors in their telephone contacts with debtors — including harassing and abusive language, profanity and racial slurs, deceptive threats of suits and other actions, calls at inconvenient times and to the debtor’s place of employment, repeated contacts, etc. Although the evidence concerned only those regional offices discussed in Appendix A and the Dallas office covered in Appendix B, it is proper for this Court — as the government contends — to find that this pattern of misconduct exists in the other CAB offices. Cf. FTC v. Kitco of Nevada, 612 F.Supp. 1282 (D.Minn.1985). This finding is supported by the additional facts that: ... the defendant’s witnesses testified that practices were established by the Dallas headquarters, and were the same or similar in all regional offices; ... the facts (see § IV) that the supposed training of new CAB collectors was nonexistent or ineffective, that even supervisors and general managers of the CAB regional offices engaged in violations of the Act and condoned improper conduct by employees in their offices, that not a single employee of the defendant has ever been disciplined in any way for violating the Act, that even persistent and well-known violators were promoted by the defendant, and that there was no meaningful investigation or response by the defendant to any complaints by debtors about the conduct of debt collectors employed by CAB. Indeed, this finding is particularly appropriate because the limitations on discovery and evidence presented at trial were ordered at the request of the defendant — partly in response to its bitter complaints about the expense of this litigation. Indeed, at the conclusion of the first trial, this Court told the government’s attorneys: “... You have got to restrain your discovery [on the other CAB offices besides Dallas], and you can’t go out and take 120 depositions. You are going to be limited and selective in the depositions that you take. You are going to have to [decide upon] one office or another, and I don’t need 23 offices. If I get similar testimony on telephone violations from one or two other offices, then I think I would be justified in saying, you know, the practice will therefore probably exist in the others. If I don’t, it would not, and it [injunctive relief] would be limited to Dallas.” (Appendix B, 412). The defendant took no exception to this approach. To the contrary, it continued to seek limitations upon discovery and upon the evidence to be presented at trial. However, since there was evidence of only a single CAB office being involved in a violation of § 808(1) {Boston), § 808(2) {Richmond), § 808(4) {Richmond), and § 806(6) {Seattle), the injunctive relief to be granted concerning these violations will be limited to the CAB office involved. As to the form letter violations, it is undisputed that the basic letters used by the defendant are the same in all regional offices, with the exception of “attorney letters.” (See Defendant’s Brief in Support of Cross-Motion for Partial Summary Judgment, filed March 18, 1985.) And, for the same reasons discussed in connection with telephone violations, it is proper for this Court to conclude that the "attorney letter” violations of the Act exist in all of the CAB regional offices. Consequently, it is appropriate that the injunctive relief sought by the plaintiff extend to all operations of the defendant, including the CAB headquarters in Dallas and to all of the CAB regional collection offices. (b) Individual Liability The defendant Robert M. Maddin is presently the sole stockholder and the president of CAB. However, there was no evidence presented that he was involved in any violations of the Act or that he knew of any violations by CAB employees. Appendix B, 408. Therefore, the relief granted will apply only to CAB, and not to the defendant Maddin. (c) Injunctive Relief This is, obviously, a case in which injunctive relief is warranted. And, the government correctly argues that the relief “should be broad enough to prevent similar types of violations by CAB to recur in the future.” See United States v. ACB Sales & Service, Inc., 590 F.Supp. at 565-66. The government also requests special injunctive relief — a requirement that the following notice be included in every collection letter sent to a consumer by CAB: “The law gives you the right to stop us from communicating with you about this debt, if you request us to do so in writing. If you ask us to stop we will. But if you owe the debt, you will still owe it, and your creditor may continue to collect it. “The collector of debts must comply with the Fair Debt Collection Practices Act, which is enforced by the Division of Credit Practices, Federal Trade Commission, Washington, D.C. 20580.” Under the circumstances of this case— where there has been a widespread pattern of repeated, serious violations of the Act — a notice like this is an appropriate, if not essential, remedial measure. The notice informing debtors of their right under the Act to request the CAB debt collector to cease collection activity will be the most effective remedy against oral harassment and other telephone violations (which, by their nature, are very difficult and expensive to prove). Similarly, it is essential that debtors have available the information they need to protect themselves at the time it will do the most good; the notice of the FTC’s involvement will enable debtors to make prompt complaints to the FTC if they receive no satisfactory response from CAB when a collector has engaged in violations of the Act. (d) Civil Penalties Contrary to the statements made by this Court after the first trial (Appendix B, 403, 408, 411), this is a case in which civil penalties are warranted. The evidence at the second trial established a widespread pattern of violations of the Act throughout the CAB regional offices. It also established: ... that the supposed training of new CAB debt collectors was really nonexistent or ineffective; ... that even CAB supervisors and general managers engaged in violations of the Act and condoned them by employees in their regional offices; ... that not a single employee of the defendant has ever been disciplined in any way for a violation of the Act; ... that even persistent and well-known violators of the Act were promoted by CAB; and ... that there was no meaningful response by CAB to any complaints it received from debtors or from state agencies about the misconduct of CAB debt collectors. The government has, indeed, demonstrated that CAB’s violations of the Act are widespread, persistent, and systematic — and not isolated instances involving a few “bad apples.” (See Appendix B, 408.) The civil penalty to be imposed should reflect the seriousness of the violations, must punish the offender, and must provide a deterrent to future violations by the offender and others. United States v. ITT Continental Baking Co., 420 U.S. 223, 229, 95 S.Ct. 926, 931, 43 L.Ed.2d 148 (1975). In determining the amount of a civil penalty, this Court is to consider: (1) the good or bad faith of the defendant; (2) the injury to the public; (3) the defendant’s ability to pay; (4) the desire to eliminate benefits derived by the violations; and (5) the necessity of vindicating the authority of the FTC and deterring future violations. See United States v. Reader’s Digest Ass’n, Inc., 662 F.2d 955, 967 (3rd Cir. 1981). In this case, the defendant CAB cannot correctly claim that it acted in “good faith” in view of the consistent and repeated violations of the Act. The public has been injured, beyond doubt, by these numerous violations; and the likelihood of any substantial number of private suits to redress this injury is remote. Although the defendant has incurred large attorneys fees in this case, and although it does claim to have lost clients and substantial business because of this litigation, CAB does have the ability to pay a civil penalty. It is not possible to determine the benefits actually derived by the defendant from the violations of the Fair Debt Collections Practices Act. But it is certainly proper to vindicate the authority of the FTC in this case so as to deter future violations of the Act by CAB and by others. Considering all of these factors, the Court concludes that a civil penalty of $150,000.00 is appropriate in this case. CONCLUSION In accordance with this Memorandum Opinion: 1. The defendant Central Adjustment Bureau, Inc., its subsidiaries, and its officers, agents, and employees, and its successors and assigns (hereinafter referred to as “defendants”), in connection with the collection of a “debt” from a “consumer" as those terms are defined in Sections 803(3) and 803(5) of the Fair Debt Collection Practices act (“Act”), 15 U.S.C. §§ 1692a(3) and (5), are permanently enjoined and restrained from: (a) Mailing, delivering or causing the delivery of a letter to a consumer which contains a direct or implied representation that a consumer’s failure to pay the debt will cause the consumer to be subject to legal action, including but not limited to the filing of a law suit, (i) when at the time such representation is made defendants do not have authority from the creditor to file suit or take the stated or implied legal action; or (ii) when, at the time such representation is made either the defendants or the creditor have not reached a decision to take the stated or implied legal action. (b) Representing orally, directly or by implication, that a consumer’s failure to pay the debt will cause the consumer to be subject to legal action, including suit, or cause the consumer’s debt to be reduced to judgment when, at the time the representations are made (i) defendants do not have authority from the creditor to take that particular legal action; or (ii) either the defendants or the creditor have not reached a decision to take such legal action at the time the representation is made; (c) Using, preparing or mailing a letter on the stationery of an attorney unless the account has been referred to the attorney for further handling and unless the defendants cease all further collection efforts on that account; (d) Making telephone calls to any consumer at the consumer’s place of employment after being requested orally or in writing by the consumer, or by the consumer’s employer, not to call at the place of employment; (e) Making telephone calls to any consumer prior to 8 o’clock a.m. at the consumer’s local time or after 9 o’clock p.m. at the consumer’s local time or at any other time that defendants know or should know are inconvenient to the consumer; (f) Making telephone calls to any person in such a manner as to harass, oppress, or abuse, or abuse such person at the called number including, but not limited to: (i) threatening that credit would be ruined; (ii) threatening that the person will be in trouble; (iii) using obscene or profane language; (iv) using abusive and demeaning language, including, but not limited to, language suggesting that the consumer is a criminal, or that the consumer should not be allowed on the streets; or (v) placing repetitious or continuous phone calls to consumers; (g) Communicating with any person other than the consumer, except as provided in § 804 and § 805(b) of the Act; (h) Making false representations or implications orally or in writing, (i) that any individual is an attorney or that any communication is from an attorney; (ii) that nonpayment of any debt will result in the arrest or imprisonment of any person, or the seizure, garnishment, attachment, or sale of any property or wages, except as provided in § 807(4); or (iii) that the consumer has committed any crime; (i) Using any false representation or deceptive means to collect or attempt to collect any debt; (j) Soliciting any post-dated check for the purpose of threatening criminal prosecution; (k) Failing to disclose in all communications made to collect a debt, or to obtain information about a consumer, that the debt collector is attempting to collect a debt and that the information will be used for that purpose; (i) Collecting any amount (including interest, fees, charges or expenses incidental to the principle obligation) unless that amount is expressly authorized by the agreement creating the debt or permitted by law [applies only to the defendant’s Boston office ]; (m) Failing to give notice of a post-dated check without notice to the consumer not more than ten nor less than three business days prior to such deposit [applies only to defendant’s Richmond, Virginia office]; (n) Depositing or threatening to deposit any post-dated check prior to the date on such check [applies only to defendant’s Richmond, Virginia office]; (o) Placing any telephone calls covered by the Act without meaningful disclosure of the caller’s identity [applies only to defendant’s Seattle office]; (p) Failing to cease collection efforts: (i) after being notified by the consumer of a dispute in accordance with 809(b) of the Act; (ii) after the debt has been paid; or (iii) after the consumer has made payment arrangements directly with the creditor. 2. The plaintiff is awarded monetary civil penalties from the defendants for the past violations of the Act in the amount of $150,000.00. 3. The defendants shall disclose in writing, in a clear and conspicuous manner, the following notices on each written statement sent to consumers in connection with the collection of a debt: “The law gives you the right to stop us from communicating with you about this debt, if you request us to do so in writing. If you ask us to stop we will. But if you owe the debt, you will still owe it, and your creditor may continue to collect it. “The collector of debts must comply with the Fair Debt Collection Practices Act, which is enforced by the Division of Credit Practices, Federal Trade Commission, Washington, D.C. 20580.” 4. The defendants shall revise its form letters to comply with this Final Judgment, and with this Court’s Memorandum Opinion, within ninety (90) days from the date of entry of this Judgment. 5. The defendants shall give written notice of the provisions of this Final Judgment within thirty (30) days from the date of its entry to each of their officers, agents, employees, attorneys, successors or assigns, and to each person who now or in the future assists or participates with the defendants in the collection of a debt. The defendants shall also file an affidavit of compliance with this Court, with a copy to the Federal Trade Commission, Division of Credit Practices, Washington, D.C., within thirty (30) days of the date of entry of Final Judgment stating the fact and manner of compliance with this paragraph, and identifying the names and positions of all persons to whom notice was given. 6. The defendants, for a period of six (6) years following the date of entry of Final Judgment shall maintain, and make available to the Federal Trade Commission for inspection and copying upon request, all form letters used by defendants in connection with any collection activities. 7. The defendants shall for a period of six (6) years following the entry of this Final Judgment, notify the Federal Trade Commission, Division of Credit Practices, Washington, D.C., at least ten (10) days before any changes such as dissolution, assignment or sale resulting in the emergence of a successor corporation, the creation, or dissolution of subsidiaries, or any other change in the corporate structure of Central Adjustment Bureau, Inc., that may affect compliance obligations arising out of this Order. Defendants are not required to provide such notice when the proposed change will result only in changes in connection with the opening or closing of an office in the ordinary course of business and will effect no other change in the corporate structure, but defendants are required to notify the Federal Trade Commission, Division of Credit Practices on an annual basis when such changes have occurred. Defendant shall provide such notification at the end of every calendar year following the entry of this Final Judgment for a period of six (6) years. 8. This Court retains jurisdiction for the purpose of enforcing or modifying this Final Judgment, and for the purpose of granting such additional relief, or enforcing this Judgment by contempt proceedings, as may be necessary. APPENDIX A SPECIFIC FINDINGS OF FACT — UNITED STATES v. CENTRAL ADJUSTMENT I. Atlanta...............387 II. Louisville..............389 III. Boston...............390 IV. Richmond............. 392 V. Seattle..............395 VI. Cleveland.............398 I. Atlanta I specifically find that Central Adjustment Bureau is liable for violations of the Fair Debt Collection Practices Act for actions taken in its Atlanta office. In so finding, I credit the testimony of debtors Joyce Gilchrist, Joyce Brown, Paula Pearson, and Martha Watson. These debtors had either paid their debts or were paying their debts, and had little to gain through their testimony. I do not, however, credit the testimony of the witnesses offered by Central Adjustment, including James Harris, Bob Adcock, and Don Goodwin, whose testimony was contradictory and whose interest in the outcome of the case was overwhelming. Among the offenses established by the testimony in this trial are the following: A. Section 805(a)(1) — inconvenient calls The testimony of Joyce Gilchrist establishes that the witness was called at 7-7:15 a.m. on a Saturday morning. I find that Ms. Gilchrist’s testimony was credible; she had paid two of her loans in full, and owed only $325 on her last loan. I do not find that the general denials of Don Goodwin, the collector who worked Ms. Gilchrist’s account, were credible. I also credit the testimony of Joyce Brown, who established that she had been called in 1984 before 8:00 a.m. B. Section 805(a)(3) — calls to place of employment I credit the testimony of Paula Pearson, who established that a collector called her at her place of employment after she requested in writing that he not call her at work. The collector, in fact, asked at speak to her supervisor at the bank at which she worked. I do not credit the testimony of Don Goodwin, the collector for Ms. Pearson, who generally denied all of Ms. Pearson’s testimony; in testifying about a check that had been returned to the debtor, he testified that he “would not have sent the check back to her, no sir,” even though his account jacket indicated that he had done so. C. Section 805(b) — communications with third parties Joyce Brown established that a collector called her home and spoke with her grandmother several times and asked the grandmother if the debt would be paid. In fact, the contact with the grandmother is corroborated by the account jacket kept by Central Adjustment, which stated: “Spoke with mother ... mother now aware of loan repay problem.” Collector Bob Adcock admitted speaking with the grandmother, but denied informing her of the loan; this testimony is directly contradicted by the information Adcock wrote on the account jacket. Paula Pearson established that a collector spoke to her roommate about her account. D. Section 806 — harassment or abuse Joyce Gilchrist testified that she was called a liar, and that the collector stated that “he doesn’t know why they let people like me go to school in the first place.” In addition to this egregious racial slur, Ms. Gilchrist also established that the collector yelled at her over the phone. Paula Pearson also testified to a collector yelling over the phone. She testified that a collector claimed he could cause her to lose her job at the bank; his conduct so upset her that she did, in fact, notify her supervisors of her problems with the collector. Her testimony establishes abusive and threatening behavior on the part of a collector. Joyce Brown testified that a collector claimed she would be “dragged to court like a common debtor.” She also testified that the collector stated, “I don’t know why they lent you the money anyway.” E. Section 806(2) — obscene or profane language Joyce Gilchrist testified that a collector called her a “god damn liar,” and used other profane language against her. Martha Watson, in a sworn declaration, stated that a collector swore at her several times and called her a “low-lying bitch” and a “low-down son of a bitch” on several occasions. I do not find credible the testimony of James Harris, the manager of the Atlanta office, that he has “absolutely not” ever heard profanity used in his office and that he has never heard of a collector raising his voice. I reject his testimony not only on the basis of credibility, but of relevance— Harris admitted that he only overhears employees sporadically. F. Section 806(5) — repeated or continuous calls Paula Pearson testified that she was called repeatedly at work, after she requested in writing that she not be called at work. G. Section 807(3) — representation as an attorney Joyce Gilchrist testified that a collector told her he was with the legal department at Central Adjustment Bureau, representing Benedict College. H. Section 807(4) — threat of arrest or imprisonment Both Joyce Gilchrist and Paula Pearson testified that they were threatened with garnishment. I. Section 807(5) — threat to take unintended action Joyce Gilchrist testified that a collector stated that he could sue her; Paula Pearson testified that a collector stated he could cause her to lose her job and that he would garnish her wages; Joyce Brown testified that a collector stated he would “drag her to court.” J. Section 807(10) — false and deceptive means Joyce Gilchrist testified that the collector stated he was with the “legal department,” and Paula Pearson testified that the collector claimed he would cause her to lose her job. K. Section 808(3) — solicitation of postdated checks Paula Pearson testified that a collector solicited post-dated checks from her. II. Louisville I also find that Central Adjustment Bureau is liable for violations of the Fair Debt Collection Practices Act for actions taken at its Louisville office. I find that the testimony of the debtors from this office was exceptionally credible, as both the Wests and the Renfros had paid off their debts entirely — indeed, the Renfros had paid off their debts before Central Adjustment began working their accounts — and none of the debtors had anything to gain by their testimony. I also credit the testimony of Randy Hutchinson, a client creditor, who testified that his client would litigate only in the case of flagrant violations. The offenses that have been established are the following: A. Section 805(a)(3) — calls to place of employment Both Howard and Nancy Renfro testified that a collector called Ms. Renfro at work, even though she requested that she not be called at work because her job would be endangered. In fact, she testified that the collector wanted to speak to her boss, to “tell him the type of person he has working for him.” B. Section 805(b) — communications with third parties The above conduct also establishes a violation of this section. C. Section 806 — harassment or abuse Both Everett and Betty West testified convincingly of numerous instances of abuse. Mr. West was referred to by a collector as a “deadbeat” and a “crook;” the collector stated that “it was crooks and people like us that give credit a bad name.” Mrs. West testified that a collector stated that Central Adjustment would put them both in jail, and take their home and car. Mr. Renfro testified that the collector calling them was “very belligerent,” threatened him and his wife, and upset his wife to the point of tears. Mr. Renfro testified that the collector kept calling even after he sent cancelled checks to Central Adjustment to prove that the debt had been paid. Mrs. Renfro testified that she had just come home from surgery, and continued to receive 12-15 harrassing calls per week. During one call to Mrs. Renfro at work— after she had asked not to be contacted there — the collector stated that “by the time I get finished you are going to need three jobs.” D. Section 806(2) — obscene or profane language Mr. Renfro testified that the collector used profanity, including demanding that Mr. Renfro “pay this damn bill.” E. Section 806(5) — repeated or continuous calls Both Mr. and Mrs. West testified of repeated calls that were “basically all the same thing, except that they kept getting a little meaner, a little bit more harrassment, a little more threatening.” Similarly, Mr. and Mrs. Renfro testified that calls continued after they had requested that they cease, both to home and work telephones. The Renfros testified that they received 12-15 calls per week, even when the collector had acknowledged receipt of proof that the underlying debt had been paid in full. F. Section 807(3) — representation as attorney The collector calling Mrs. Renfro represented himself as a “consumer law expert” and stated that he “knew the law.” G. Section 807(4) — threat of arrest or imprisonment Mrs. West was told that Central Adjustment could have them put in jail, and take their home and car. The Wests were threatened with suit, and the collector told them she could ruin their credit. The Wests and Renfros were threatened with garnishment. H. Section 807(5) — threat to take unintended action Both the Wests and the Renfros received repeated threats of suit and garnishment, which I just described. Diane Greene was threatened with suit, even though the client creditor to which she owed the underlying debt had authorized suit only in egregious cases and “friendly” suits against estates. I. Section 807(7) — representations of debtor crime Mrs. West was told that she and her husband could go to jail if the debt was not soon eliminated. J. Section 807(10) — deceptive means to collect debt The collector calling Mr. West told him that she could ruin his credit. K. Section 808(3) — solicitation of postdated checks Even after the Renfros had sent the collector handling their account proof that their debt had been paid in full, the collector “wanted me to post-date him checks. He couldn’t wait for the money____ He wanted his payment now.” III. Boston I find that violations of the Act have also occurred at the Boston office of Central Adjustment. In so finding, I credit the testimony of the debtors Nancy Munise, Claire Cassani, Dorothy Lariviere, and Janice Williams. Ms. Munise was especially credible, as her debt has been entirely eliminated and she has no vested interest in the subject of her testimony. Ms. Cassani also had no ax to grind, as the small debt that was the subject of her contacts with Central Adjustment was paid before Central Adjustment attempted to collect it. The other debtors, similarly, have resolved their credit difficulties, and are making payments on their debts. I do not, however, find the testimony of Gary Dishman credible. His demeanor while testifying was evasive, and his general denials of any misconduct were unconvincing at best. I credit the testimony of Allan Roth insofar as it establishes that the blame for violations established by the debtor testimony should be shouldered by the management of Central Adjustment as well as the individual collectors. Roth testified that “can hear all conversations from our side” when supervising his collectors, except for a 15- to 30-minute period each day. Moreover, Roth established that only two collectors had ever been disciplined by him — one was fired for not producing enough income, and another, Dishman, was disciplined for having excessive absenteeism. The violations for which the company is responsible in Boston are these: A. Section 805(a)(1) — inconvenient calls Claire Cassani testified that she was called before 8:00 a.m. several times, and that the collector said he would call her early again —“that was his right to do as he wanted to do.” Janice Williams testified that she received one call at 7:45 a.m. Nancy Munise testified that she received calls at 7:00 a.m. and at 9:00 p.m. Dorothy Lariviere testified that she was called at 7:45 a.m. B. Section 805(a)(3) — calls to place of employment Ms. Williams testified that she told a collector not to call her at work, but that he persisted in doing so. Her supervisor wrote to Central Adjustment — and the letter is in evidence — complaining that the collector persisted even though personal calls were not allowed and the calls interfered with Ms. Williams’ ability to do her job effectively. She received up to five calls at work in one day. C. Section 805(b) — communications with third parties Ms. Cassani testified that a collector called both her father and her brother; the collector attempted to find out from them if Ms. Cassani owned a car, the plate number, and the name of her bank. Ms. Munise testified that a collector talked to both her father and her stepmother. D. Section 806 — harassment or abuse Ms. Munise testified that she was called a liar; the collector asked “why should we believe you?” Ms. Cassani testified that the collector had a “very nasty attitude,” and referred to her as “honey,” “babe,” and “sweetheart.” Ms. Lariviere testified that the collector was “nasty but tolerable” at the outset, but became worse — he yelled “all kinds of threats and accusations” at her, and called her irresponsible. He was not deterred by the fact that she was eight months pregnant; rather, he stated that she “shouldn’t be pregnant if [she owed] that much money out.” Ms. Williams testified to being threatened and harassed, and was disturbed by the collector’s conduct to the point of seeking psychological care. E. Section 806(2) — obscene or profane language Ms. Cassani testified that a collector called her a “bitch,” and said that “it’s people like you [that] screw up the world because you don’t pay your bills.” He also said that he “didn’t give a shit about my bills.” Ms. Williams testified that a collector said the judge who would handle his suit against her “didn’t give a fuck” about her situation. F. Section 806(5) — repeated or continuous calls Ms. Cassani was called more than once in a day; Ms. Williams was called five times in one day at work, and three more times at home; Ms. Munise was called seven times in two months and her relatives were called 12 times. G. Section 807(4) — threat of arrest or imprisonment Ms. Munise testified that she was told Central Adjustment would attach her car, home, and salary. Ms. Williams was told that her wages and property would be attached. Ms. Lariviere was told that Central Adjustment would take her husband’s wages, as well as their furniture and car; she was also told that she “could be hauled off to jail.” When she told the collector they did not own anything worth $3,000, he replied: “Well, we’ll have to take a lot of things, then, won’t we?” Ms. Cassani was told Central Adjustment would attach her property, car, and assets; a collector said “he was putting a warrant out for my arrest.” H. Section 807(5) — threat of unintended actions Ms. Cassani was threatened with suit seven to 10 times, and was sent attorney letters; this action was taken despite the fact that the collector, Gary Dishman, knew that his client had specifically stated that it would not sue Ms. Cassani. She was also told that she would be responsible for all of Central Adjustment’s attorneys’ fees and costs. Ms. Lariviere was threatened with suit more than once. Ms. Williams was also thre