Several Debt Collection Companies Shut Down Following FTC Enforcement Actions
In an ongoing crackdown of illegal debt collection, the Federal Trade Commission (FTC) has settled with or filed charges against several operations.
These debt collection operations used illegal tactics including harassing phone calls, false threats of lawsuits and arrests, attempts to collect phony debts, not providing consumers with legally required disclosures, and noncompliance with state licensing requirements. Some cases have already been settled, while others are ongoing.
AFS Legal Services
AFS allegedly called consumers and demanded payment of payday loan or other purported debt, even when consumers disputed the debt and the defendants failed to verify that money was owed. Representatives impersonated investigators and law enforcement and threatened to arrest or sue consumers if they did not pay. The collectors also made harassing calls and contact relatives, friends, and coworkers about the consumers' debt. It is estimated that the company caused about $4 million in consumer injury.
AFS Legal Services and its operators are bound by a preliminary injunction while litigation is pending.
Premier Debt Acquisitions
Doing business under several names, Premier Debt Acquisitions agreed to a permanent injunction that will ban the company and its associates from debt collection business, misrepresenting facts about financial products and profiting from their former customers' personal information. The company is also ordered to pay about $2.230 million, but that judgement has been partially suspended.
Representatives from the company pretended to be law enforcement officials or process servers and threatened to have consumers arrested for nonpayment. They also falsely threatened consumers with lawsuits and wage garnishment, and withheld information consumers needed to confirm or dispute debts.
Warrant Enforcement Division
The FTC reached a similar agreement with Municipal Recovery Services Corporation, a company that sent letters and postcards that falsely implied that they had come from a municipal court. To make matters worse, the letters falsely threatened consumers with arrest if they did not pay overdue utility bills, traffic tickets, court fines and other debts for local governments in Texas and Oklahoma. The letters also failed to inform consumers of the amount of the debt and the creditor's name, and their right to dispute the debt.
The company and its operators are banned from misrepresenting any facts while collecting debts and is ordered to pay a $195,000 judgement. That judgement, however, has been suspended based on the defendants' inability to pay.
Williams, Scott & Associates
The FTC has obtained a permanent injunction against the final defendant in its case against Williams, Scott & Associates, LLC. A previous order banned Chris Lenyszyn from debt collection activities, and ordered him to pay more than $565,000 for using deception and threats to collect on phantom payday and other loan debts that consumers didn't owe. An earlier order, in April 2015, banned John Williams, Williams, Scott & Associates, LLC; and WSA, LLC from debt collection and ordered them to pay $3.9 million.