A U.S. district court halted a Buffalo, N.Y. area collection operation charged with violating the Federal Trade Commission Act and the Fair Debt Collection Practices Act by misrepresenting that they were with the government, falsely accusing consumers of committing check fraud and then threatening consumers with arrest.
A lawsuit charged two individuals, Mark Briandi and William Moses, and 13 interrelated companies in connection with the case. Operating the scheme since at least May 2010, the defendants portrayed themselves as representatives of the government by using company names that suggested a government affiliation or national presence - such as Federal Recoveries LLC, Federal Check Processing Inc. and Nationwide Check Processing.
The defendants threatened consumers with consequences such as lawsuits, arrest and imprisonment or seizure of assets unless consumers paid the debt immediately. The defendants allegedly bought debts and collected debts owed to other companies, and much of the debts the defendants collected on had originated from payday loans.
The defendants in the case repeated their deceptive claims to consumers family members, friends, coworkers and employers and revealed the nature of the consumers debts to the third parties, the complaint stated.
According to consumers interviewed by the FTC, the defendants routinely refused to provide information about the debt, as required by federal law, or to investigate the debts legitimacy even after some consumers explained that they did not owe the debt, the debt had been paid in full or the defendants did not have the authority to collect on the debt.
The defendants allegedly collected millions of dollars from consumers using these unlawful tactics.
The court order freezes the operations assets and appoints a temporary receiver to take over the defendants business, pending a hearing scheduled for March 17. The Federal Trade Commission requested that the court stop the operation.
"These debt collectors took deception to new lows, said Jessica Rich, director of the FTCs Bureau of Consumer Protection. They bullied consumers, falsely accused them of crimes, and pretended to be government officials. Stopping their illegal activity is a real victory for consumers.
Along with Briandi and Moses, the complaint names as defendants Federal Check Processing, Federal Recoveries, Federal Processing, Federal Processing Services, United Check Processing, Central Check Processing, Central Processing Services, American Check Processing, State Check Processing, Check Processing, Nationwide Check Processing, US Check Processing and Flowing Streams.
Another company, Empowered Racing LLC, was not actively involved but profited from the scheme and was named as a relief defendant.