The Federal Trade Commission on Thursday announced it has stopped illegal debt collection tactics of several debt collection operations. The crackdown includes four cases already highlighted in Collections & Credit Risk. The FTC issued a statement about the cases to point out the success of
The cases include:
AFS Legal Services
In November, the FTC brought an action against National Payment Processing LLC; National Client Services LLC, also doing business as AFS Legal Services, AFS Services, Account Financial Services, and Account Financial Solutions; Omar Smith; and Ernest Smith. The operation 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.
According to the complaint, the defendants impersonated investigators and law enforcement and threatened to arrest or sue consumers if they didn't pay. Because they often had consumers’ personal information such as Social Security and bank account numbers, consumers believed the calls were legitimate and thought they would be arrested for check fraud or sued. The collectors also made harassing calls and contacted relatives, friends and co-workers about consumers’ debts. The defendants allegedly have caused around $4 million in consumer injury, using multiple corporate names and locations to avoid detection, and failing to identify themselves as debt collectors.
The defendants have agreed to be bound by a
Samuel Sole and Associates
In May 2015, the FTC obtained court
The defendants since have agreed to a
Warrant Enforcement Division
Defendants Municipal Recovery Services Corporation, d/b/a Warrant Enforcement Division, and its owner, Marcos Nieto, a/k/a Mark Nieto have agreed to settle
Under a
Williams, Scott & Associates
The FTC has obtained a permanent injunction against the final defendant in its case against Williams, Scott & Associates LLC. On November 4, the court granted summary judgment in the FTC’s favor and 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.
Other federal and state law enforcement officials recently have taken 12 more actions as part of Operation Collection Protection.
- the Consumer Financial Protection Bureau has resolved four law enforcement actions and issued a
compliance bulletin on in-person debt collection ; - the Minnesota Department of Commerce signed consent orders that stopped Collect Pros and Service Investment Company from further law violations and imposed civil penalties totaling $33,000, and convinced a court to impose a receivership on CLX/Westwood Management Inc.;
- the Colorado Department of Law denied Collect Pros’ renewal application and 4-Star Resolution’s license application and took action against PC Legal Services for engaging in collection practices without a license, resulting in a $613,500 civil penalty (details can be found
here ); - the Indiana Attorney General’s Office also took action against Collect Pros, entering into an
assurance of voluntary compliance with Collect Pros; and - the Massachusetts Attorney General’s office
sued one of the largest debt collection law firms in Massachusetts, Lustig, Glaser & Wilson PC and its owners, Ronald Lustig and Kenneth Wilson, who allegedly used illegal threats of lawsuits to obtain payments and sued consumers for debts they did not owe or for debts that were inaccurate.