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Consent Order

Consent Order Franklin Collection Service, Inc.

Date: 04/15/2015
Organization: Division of Banks
Docket Number: 2015-003
Location: Tupelo, MS

Order terminated on September 13, 2018

Table of Contents


Suffolk, SS.

Docket No. 2015-003


In the Matter of

Tupelo, Mississippi

Debt Collector License No. DC-0860

WHEREAS, FRANKLIN COLLECTION SERVICE, INC., Tupelo, Mississippi (Franklin Collection or the Corporation), a licensed debt collector under Massachusetts General Laws chapter 93, section 24A and 209 CMR 18.00 et seq., has entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF A CONSENT ORDER (Consent Agreement) with representatives of the Division of Banks (Division) dated April 14, 2015, whereby, solely for the purpose of settling this matter, and without admitting any allegations or implications of fact or the existence of any violation of state or federal laws and regulations governing the conduct and operation of a debt collector, Franklin Collection agrees to the issuance of this CONSENT ORDER (Order) by the Commissioner of Banks (Commissioner);

WHEREAS, on October 13, 2010 the Commissioner and Franklin Collection entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF A CONSENT ORDER, Docket No. 2010-346 (2010 Consent Order), for the purpose of settling the matters raised during a 2009 Examination of Franklin Collection’s books and records.

WHEREAS, an examination of Franklin Collection was conducted pursuant to General Laws chapter 93, section 24D as of March 31, 2014 to assess the Corporation’s level of compliance with applicable Massachusetts and federal statutes, rules and regulations governing the conduct of those engaged in the business of a debt collector in the Commonwealth, as well as to assess the Corporation’s compliance with the 2010 Consent Order;

WHEREAS, the Report of Examination (the Report) issued pursuant to the Division’s 2014 examination of Franklin Collection alleged substantial non-compliance with applicable state and federal statutes, rules, and regulations governing the conduct of those engaged in the business of a debt collector in the Commonwealth, as well as failure to comply with certain provisions set forth in the 2010 Consent Order;

WHEREAS, the parties now seek to resolve by mutual agreement, the matters identified in the Report; and

WHEREAS, by mutual agreement of the Corporation and the Division, the 2010 Consent Order is hereby superseded and replaced by this Order.


NOW COME the parties in the above-captioned matter, the Division and Franklin Collection, and stipulate and agree as follows:

  1. Franklin Collection must develop, implement and maintain an effective compliance management system, including but not limited to, adequate oversight of the Corporation’s compliance program by the officers and senior management with sufficient resources dedicated to the administration of the compliance program.
    1. The compliance program must include, at a minimum: adequate policies and procedures; effective internal monitoring on an ongoing basis; sufficient training to ensure management and employees are familiar with statutory and regulatory requirements; and periodic independent testing of Franklin Collection’s programs and operations with sufficient scope and depth to determine whether the Corporation is operating in compliance with applicable consumer protection requirements.
  1. Franklin Collection must immediately cease commingling operating funds with client funds collected from Massachusetts debtors.
    1. The Corporation must ensure that all client funds are deposited into, and remitted from, one or more trust accounts maintained at a federally insured bank as required by 209 CMR 18.12, and that client funds remain segregated from any operating funds of the Corporation at all times as required by 209 CMR 18.11. The Corporation must implement procedures to ensure that client funds are maintained and monitored in accordance with the Division’s regulations, including monthly reconciliation of escrow accounts.
    2. Franklin Collection agrees to submit a payment in the amount of two thousand five hundred dollars ($2,500.00) payable to the "Commonwealth of Massachusetts," in satisfaction of an administrative penalty collected in consideration of the fact that the Corporation commingled funds collected from clients with operating funds. This payment must be submitted to the Division of Banks with the executed copy of the Consent Agreement,
  1. Franklin Collection must immediately cease charging unauthorized and excessive fees to Massachusetts debtors in violation of 209 CMR 18.17. Franklin Collection must establish, implement, and maintain procedures to ensure that it does not collect any fee, charge, or expense incidental to the principal obligation, unless such amount is expressly authorized by the agreement creating the debt or permitted by law.
    1. Franklin Collection must conduct a full portfolio review of all collection activity since November 17, 2009, the date of the prior examination, to identify all Massachusetts debtor accounts that were charged unauthorized fees that were not authorized by the original agreement creating the debt, including but not limited to insufficient funds (NSF) fees, fees for paid or settled in full letters, and payment convenience fees to the extent that the fees retained by the Corporation or any of its affiliates exceeded the actual cost for the service paid to an independent third party. The Corporation must reimburse each debtor for the full amount of each such fee collected.
    2. Franklin Collection must submit to the Division documentation of the review performed on its Massachusetts collection accounts, including a list of all the accounts reviewed, which includes, at a minimum: the name of the debtor; the account number; the date(s) of the fee(s), the amount of any corresponding third party payment processing fee, the total amount of each overcharge and the check number of each refund or evidence that the debtor's account was credited.
    3. Franklin Collection must certify that it has made a good faith effort to ensure that those customers who were overcharged have been sent refund checks, using reasonable means available to identify the current address of each such customer. In all cases where debtors cannot be located, the Corporation must comply with Massachusetts General Laws chapter 200A regarding the disposition of unclaimed property.
  1. Franklin Collection must establish, implement, and maintain adequate controls to ensure that its employees refrain from making false or misleading statements to consumers. In order to comply with this Section of the Order, Franklin Collection must provide appropriate training to its collection staff and must monitor collector calls to ensure the Corporation’s collectors are not making any false or misleading statements to consumers.
  2. Franklin Collection must address all matters requiring attention and required corrective action set forth in the Report within the time frames contained therein. Franklin Collection must also adopt and implement any corrective actions discussed in the Report that are not specifically addressed by the provisions of this Order.
    1. Franklin Collection must ensure that all applicable personnel receive adequate instruction and ongoing, periodic training to ensure proper implementation and execution of the revised practices and procedures implemented pursuant to this Order.
  1. Franklin Collection must establish, implement and maintain procedures to ensure that the Corporation has audited or reviewed financial statements prepared in accordance with generally accepted accounting principles in the United States, incorporating the accounts of any variable interest entities, submitted to the Division within ninety (90) days of its fiscal year end, as required by the Division’s regulation 209 CMR 18.03.
  2. By the thirtieth (30th) day after the end of each calendar quarter following the effective date of this Order, Franklin Collection must furnish written progress reports to the Division, which address and include the following:
    1. A description of the form, content, and manner of any actions taken to address each Section of this Order and the results thereof, including but not limited to, documentation of client trust account activity that would demonstrate the Corporation’s compliance with Section 2 of this Order; and
    2. Written findings prepared by Franklin Collection detailing a review of management’s and staff persons’ adherence to the policies, programs, and procedures adopted pursuant to this Order and to applicable statutes, regulations, and rules, as well as a description of any operational changes implemented during such quarter which are intended to improve Franklin Collection’s compliance condition in Massachusetts, and the results thereof.
  1. The reporting requirement to the Division referenced in Section 7 of this Order will remain in effect and must not be amended or rescinded without the prior written modification, termination, or suspension of the applicable provision of this Order from the Commissioner.
  2. The provisions of this Order shall not limit, estop, or otherwise prevent the Division, or any other state agency or department, from taking any other action affecting Franklin Collection, its successors or assigns.
  3. Nothing in this Order will be construed as permitting Franklin Collection to violate any law, rule, regulation, or regulatory bulletin to which the Corporation is subject.
  4. In consideration of the foregoing Order, the Division agrees not to pursue formal measures, relative to this matter, to suspend or revoke Franklin Collection’s debt collector license under General Laws chapter 93, section 24I, while this Order is in effect.
  5. Failure to comply with the terms of this Order will constitute grounds for license suspension and/or revocation pursuant to applicable provisions of the General Laws of the Commonwealth of Massachusetts.
  6. This Order will become effective immediately upon the date of its issuance.
  7. The provisions of this Order are binding upon Franklin Collection, its owner, officers and directors, and their successors and assigns.
  8. The provisions of this Order will remain effective and enforceable except to the extent that, and until such time as, any provisions of this Order will have been modified, terminated, suspended, or set aside by the Commissioner or upon an order of a court of competent jurisdiction.
  9. This Order and the Consent Agreement are the complete documents representing the resolution of this matter.. There are no other agreements between the Division and Franklin Collection.


Dated at Boston, Massachusetts, this 14th day of April, 2015.


David J. Cotney
Commissioner of Banks