FTC Permanently Shuts Down Debt Collection Business
At the request of the Federal Trade Commission, a U.S. district court has closed the Texas-based company after it allegedly used deception, insults, and false threats against consumers. The operation also charged unauthorized fees and the owner will surrender his assets.
The owner of a Houston-based debt collection operation that the Federal Trade Commission charged used insults, lies, and false threats of imprisonment to collect on payday loans will surrender his assets, estimated to be worth $550,000, to pay restitution to consumers who were charged unauthorized fees.
All the defendants will be permanently banned from debt collection under asettlement with the Federal Trade Commission.
In 2013, at the request of the FTC, a U.S. district court shut the debt collection company, froze its assets and appointed a receiver to take control of the business while the case was in litigation.
The debt collection operation did business nationwide, collecting primarily on payday loans. In some cases it owned the debt, and in others, it acted as a third-party collector. The operation was charged with multiple violations of both the FTC Act and the Fair Debt Collection Practices Act.
“Debt collectors who harass consumers, make false threats, and charge bogus fees are violating federal law and will be held accountable,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection.
The defendants were charged with making false threats that consumers would be arrested and jailed, and that their children would be taken into custody; falsely claiming to be attorneys or to work hand-in-hand with local sheriff’s offices; disclosing debts to consumers’ employers and military superiors; and collecting bogus late fees and attorneys’ fees, according to a complaint filed by the FTC.
The settlement resolves FTC allegations against the company owner, company managers and several corporate defendants. The settlement requires the company owner to surrender his assets, estimated at $550,000. The remainder of a $1.4 million judgment against the owner is suspended based on inability to pay.
The judgment against the company managers also is suspended due to their inability to pay. If it is later determined that the financial information the defendants provided the FTC was false, the full amount of the judgment will become due.
The monetary judgment will be used to pay restitution to consumers who were charged unauthorized late fees and attorneys’ fees, often in the hundreds of dollars.