Atlanta-based collection agency Zenith Financial Group will shut down after owner Earnest Earvin IV agreed last week to settle alleged violations of the Georgia Fair Business Practices Act. The deal requires Earvin and the company to exit the collections business and stay out for five years. If not, Earvin will be subject to a $445,000 penalty, according to the Georgia Governor’s Office of Consumer Protection.

The agreement, in the form of an assurance of voluntary compliance, was filed in Fulton County (Ga.) Superior Court, and means the agency immediately stopped collection attempts on more than $3.1 million in purported debts from 9,259 accounts. The company also will pay a $15,000 penalty.

Zenith Financial was accused of threatening consumers with arrest or prison and hiding that its collectors were contacting consumers to collect a debt and that any information they obtained could be used for that purpose.

Earvin and the company are prohibited from pretending that they are attorneys or are affiliated with a law firm or government agency. Earvin also is not allowed to help any other collection business in any way. Earvin could not be reached Thursday for common t

John Sours, administrator of the consumer protection office, said the $445,000 penalty would be due immediately if Earvin violates any terms of the deal. He said his office received dozens of complaints about profane language, calls before 8 a.m. and after 9 p.m., the agency refusing to provide evidence that a debt was owed and prosecution and arrest threats.Complaints against debt collection agencies routinely are actually lodged against fly-by-night companies that are considered pariahs of the legitimate collection industry. Sours said he’s seeing consumer complaints against collectors ramp up.

In the Zenith Financial case, Sours said many of the accounts the agency attempted to collect likely were once authentic but a growing problem of “phantom debts” raised concerns. Also, he believes it’s likely the statute of limitations expired for many of the accounts. 

Earvin declined to cooperate with an initial probe from the consumer protection office, which led to a $460,000 penalty. Earvin then responded and the state allowed him to pay the $15,000, subject to the additional $445,000 if the agreement is broken.

Zenith Financial collected on bills for auto loans, bank loans, credit card bills, bad checks, medical claims and payday loans, according to its website.

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