On March 22, 2018, the Federal Trade Commission (FTC), in conjunction with the New York Attorney General (AG), announced that it had entered into settlements with debt collection companies and their operators over allegedly deceptive and unlawful debt collection practices.
In a February 2015 complaint filed in the United States District Court for the Western District of New York, the FTC and NY AG alleged that the defendants used abusive and deceptive debt collection tactics in violation of Section 5(a) of the Federal Trade Commission Act, 15 U.S.C. § 45(a), the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692-1692p, and New York’s General Business Law Article 22-A. According to the complaint, the defendants tricked consumers into believing they had outstanding debts and would pressure them into making payments on those debts by using fictitious names and threatening arrest and other legal action. It further claimed that the defendants failed to provide statutorily required notices and disclosures, and made unlawful disclosures of information to third parties.
The settlement orders against the defendants, located here, here, and here, require defendants to pay a total of $48,789,000 in equitable monetary relief, and prohibit the defendants from engaging in debt collection activities or advertising, marketing, or offering for sale any consumer or commercial debt or information, and from making misrepresentations relating to financial-related products or services.
Criminal actions were also pursued against individuals involved in the scheme, and 14 guilty pleas were obtained.