New York AG and FTC Secure Judgment Against Alleged Phantom Debt Collection Scheme

On July 1, 2019, New York Attorney General Letitia James (“New York AG”) announced that together with the Federal Trade Commission (“FTC”), the agencies had entered into a settlement with a debt collection company, a related entity, and corporate officers to resolve a case filed in the United States District Court for the Western District of New York.  The lawsuit alleged that the defendants had invented phantom debts and then collected them from consumers who did not actually owe anything, in violation of the Fair Debt Collections Practices Act, 15 U.S.C. § 1692l, and Federal Trade Commission Act, 15 U.S.C. § 53(b).

The settlement permanently bars the companies from debt collection, distributing debts, or processing payments on any debts.  The orders include judgments against the defendants totaling $11.69 million.  Those judgments have been suspended in part, requiring the defendants to pay a total of $676,575.

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