On June 4, 2018, the Federal Trade Commission (FTC) announced a settlement with a North Carolina debt collection company and its principals over alleged illegal collection practices.
In August 2017, the FTC filed an action against the defendants alleging violations of Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45, and the Fair Debt Collection Practices Act, 15 U.S.C. § 1692. Specifically, the FTC charged the company and its principals with tricking consumers into believing they owed money on payday loans or other debts that they did not owe. According to the FTC, the defendants posed as law firms and would threaten arrest or legal action if consumers did not pay off these fake debts.
The stipulated order and settlement imposes a judgment against one of the principals of $2,722,452 in equitable monetary relief of which the other principal is jointly and severally liable for $1,635,803; a separate order against the remaining principal imposes a judgment of $1,814,045, of which the other defendants are jointly and severally liable for $1,635,803. The orders ban defendants from engaging in debt collection activities or the buying and selling of debt or debt-related information, prohibit misrepresentations relating to financial-related or other products or services, and subject defendants to compliance monitoring. The judgment was partially suspended based on the defendants’ financial state.