Defendants in a debt collection operation that allegedly sought payment for bogus magazine subscription debts have settled with the Federal Trade Commission.
The proposed settlement, filed by the Department of Justice on the FTC’s behalf, bars Luebke Baker and Associates Inc., Kevin Luebke and other defendants from representing that a consumer owes a debt without having a reasonable basis to do so, and from making any other misrepresentations when collecting debts or selling goods and services.
The settlement imposes monetary judgments totaling $3.1 million – $2.3 million in civil penalties for violations of the Fair Debt Collection Practices Act (FDCPA), $730,000 in disgorgement for collecting Cross Media Marketing Corp. accounts in violation of the FTC Act, and $45,000 in restitution to consumers for charging an advance fee for a credit repair product in violation of the Telemarketing Sales Rule.
The defendants allegedly collected on debts for subscriptions despite the fact that the FTC had successfully sued the company that originally sold the subscriptions for deceptive marketing. The defendants were notified of a 2003 federal court order against Cross Media that placed special requirements on anyone attempting to collect payment for these magazine subscriptions. The FTC alleged that the defendants knew, or should have known, that some of the subscription debts they were collecting were not valid.
The FTC alleged that the defendants ignored these requirements and repeatedly told consumers the debts were due and payable.
The complaint also alleges that the defendants:
• illegally masked their identity and sent false information over caller ID, falsely posing as Ed McMahon, attorneys from a law firm and other entities;
• falsely told consumers that magazine subscription debts are exempt from the statute of limitations; and
• illegally threatened to garnish wages and take other unintended legal actions.
The defendants also marketed a credit repair CD titled “Credit Solutions,” allegedly collecting an up-front fee before providing any goods or services, in violation of the Telemarketing Sales Rule, which bans advance fees imposed by companies selling credit repair goods and services, according to the complaint.
Under the settlement order, when the defendants attempt to collect debts, they must provide consumers with disclosures about their rights under the Fair Debt Collection Practices Act. The order also requires the defendants to inform their collection employees of their personal obligations under the FDCPA.
The complaint and proposed settlement also names as defendants Leslie M. Farrar, Matthew T. Scott and Joel P. Ferguson. Julissa Luebke - Kevin Luebke’s wife - is named as a relief defendant.
