FTC Obtains Settlement Order Banning Debt Collectors from Debt Collection Business

The FTC recently obtained a settlement order banning from the debt collection business three defendants who allegedly posed as lawyers and falsely threatened to sue people or have them arrested for failing to pay debts they did not owe.  The settlement order resolves a FTC complaint filed in July 2017.

Pursuant to the FTC’s complaint, the defendants called people without identifying themselves as debt collectors, stated that a lawsuit or criminal action had been filed or soon would be filed against them, and gave them a fake “case number” and a phone number to call.  Those individuals who responded were told that the callers were attorneys or were calling from a law firm.  Moreover, the FTC alleged that the defendants threatened the individuals with prison time or claimed that police would arrest them at their homes in order to coerce the individuals into paying the phantom debts.

The settlement order prohibits the defendants from participating in debt collection activities, buying or selling consumer or commercial debt, and trading in consumer information related to a debt.  The defendants are also banned from making misrepresentations regarding any product or service, profiting from consumers’ personal information obtained from any debt collection activities, and failing to properly dispose of consumers’ information.

The settlement order imposes a $702,059 judgment that will be partially suspended upon the surrender of certain assets.  An additional defendant remains subject to ongoing litigation.

The full text of the FTC’s settlement order is available here.