FTC Settles With Operators of Debt Collection Scheme, Permanently Barring Defendants From Debt Collection


FTCOn December 11, the Federal Trade Commission (FTC) announced it had reached a settlement with the remaining Defendants in an enforcement action against multiple related companies and their controllers involved in an alleged phantom debt scheme in which the Defendants pressured consumers into paying non-existent debts by threatening legal action and falsely claiming to be attorneys or affiliated with attorneys.

The FTC initiated this action in February in the Western District of North Carolina, covered by Enforcement Watch here, claiming the Defendants had engaged in deceptive, abusive, and unfair practices in violation of the Federal Trade Commission Act (FTC Act), 15 U.S.C.§ 45(a) and had also violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692-1692.

Under the settlement, the Defendants agreed to a permanent ban from participating in debt collection activities and from advertising or buying any consumer or commercial debt.

This settlement follows a prior settlement in May with other Defendants who agreed to settle the claims against them.  In total, the settlements include monetary judgments of approximately $25.5 million, although the majority have been suspended because of the Defendants’ inability to pay.  The latest settlement includes $3.1 million in equitable relief, which was not suspended.