The Federal Trade Commission has sued a group of affiliated collection agencies and their owners for using the words "Federal," "American," "U.S.," or "State" in their names and for collection tactics such as threatening to arrest customers.
Federal Check Processing Inc., of Amherst, N.Y., is the lead defendant. The list, according to a Courthouse News Service report, includes: Federal Recoveries LLC; Federal Processing Inc.; Federal Processing Services Inc.; United Check Processing Inc.; Central Check Processing Inc.; Central Processing Services Inc.; Nationwide Check Processing Inc.; American Check Processing Inc.; State Check Processing Inc.; Check Processing Inc.; US Check Processing Inc.; Flowing Streams F.S. Inc.; Mark Briandi; and William Moses. Empowered Racing LLC is named as a relief defendant. The defendants are all located in the Buffalo, N.Y. area.
In the federal lawsuit, the defendants "abusive, unfair and deceptive" collection tactics are outlined.
"Since at least May 2010, and continuing thereafter, defendants have used abusive, unfair, and deceptive tactics to pressure consumers into making payments on purported debts, often with respect to loans that the consumers have challenged in part or in whole. Defendants regularly have contacted consumers via repeated telephone calls and have threatened consumers with dire consequences - including arrest - if consumers fail to make immediate payments to the defendants. Defendants regularly have failed to identify themselves as debt collectors, have failed to provide consumers with basic information about themselves or the purported debt, and have failed to provide consumers with the information necessary, and required by law, to confirm or dispute the debt.
"Many consumers have paid the alleged debts that defendants have attempted to collect because they have been afraid of the threatened repercussions of failing to pay, because they have believed defendants are legitimate and are collecting delinquent debt, or because they have wanted to stop the harassment," the lawsuit states.
The defendants have collected millions of dollars through misrepresentations, the FTC claims. In many cases, the defendants contacted consumers by telephone repeatedly and asserted that the consumer has committed check fraud or another criminal act. The defendants also often failed to identify themselves as debt collectors and stated or implied an affiliation with federal, state or local government. Defendants often asserted that unless the consumer makes an immediate payment of hundreds of dollars, defendants will have the consumer arrested."