The Federal Trade Commission has issued a complaint against a Texas-based debt collection operation and its current and former principals for threatening consumers with false claims that unless they pay a debt, they will face legal action or wage garnishment.

The complaint charges Commercial Recovery Systems Inc. (CRS), its president, Timothy Ford, and its former vice president, David Devany, with violating the FTC Act and the Fair Debt Collection Practices Act by using deceptive methods to collect debts.

CRS has been collecting consumer debts nationwide since 1994. The company collects third-party debt, including credit card and auto loan debt. The company’s representatives contact consumers via telephone and mail.

The complaint was filed in federal court on the agency’s behalf by the Department of Justice.

"When it comes to debt collection, people have rights," said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. "It’s illegal to harass people, or to make false threats about wage garnishment or lawsuits. Unfortunately, these unscrupulous debt collectors systematically lied to the people they called."

According to the complaint, since at least 2010, CRS's debt collectors have deceptively told consumers that unless they pay a debt CRS claims they owe, a collection lawsuit will be filed against them. In some cases, consumers are told that such a case has already been filed and will lead to adverse consequences unless the debt is paid.

"The defendants in this case are alleged to have lied to consumers in violation of the law," said DOJ’s Acting Assistant Attorney General for the Civil Division, Joyce R. Branda. "We will enforce these laws and stop those who would use deception to extract money from American consumers."The FTC also alleges that in many cases, when CRS calls consumers to collect on a debt, its representatives falsely claim or imply that they are lawyers or are calling on behalf of a lawyer, or that they are judicial employees.

The complaint alleges that in other cases, CRS falsely tells consumers that they will garnish their wages, levy their bank accounts, or seize their property unless they pay the debt. In truth, CRS lacks the authority and intent to take any of these actions.

In issuing the complaint, the FTC is seeking an injunction to stop the allegedly illegal conduct and civil penalties. CRS officials were not immediately available for comment. 

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