Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Actions, results announced in abusive debt collector crackdown, (Jan 8, 2016)

By Michael Menzhuber, J.D., LL.M.

The debt collection tactics of several debt collection operations have been stopped by the FTC. Additionally, twelve more actions have been taken by other federal and state law enforcement officials as a part of a federal-state-local initiative against deceptive and abusive debt collection practices. This brings the total number of actions taken by more than 70 law enforcement partners in “Operation Collection Protection,” to 130 over the past year, the FTC announced yesterday.

AFS Legal Services. In November 2015, the FTC brought an action against National Payment Processing LLC; National Client Services LLC, also d/b/a AFS Legal Services, AFS Services, Account Financial Services, and Account Financial Solutions; Omar Smith; and Ernest Smith. The operation allegedly called consumers and demanded payment of payday loans or other debt, even when the consumers disputed the debt and the defendants failed to verify the money owed.

According to the FTC’s complaint, the defendants: (1) impersonated investigators and law enforcement; (2) threatened to arrest or sue consumers if they did not pay; (3) made harassing calls; (4) contacted relatives, friends and co-workers about consumers’ debts; (5) allegedly caused around $4 million in consumer injury; (6) used multiple corporate names and locations to avoid detection; and (7) failed to identify themselves as debt collectors.

The defendants agreed to be bound by a preliminary injunction, pending the litigation in which they are prohibited from using the illegal collection tactics described in the FTC’s complaint. They are also barred from activities that violate the Fair Debt Collection Practices Act.

Samuel Sole and Associates. In May 2015, court orders obtained by the FTC temporarily halted the operations of Premier Debt Acquisitions LLC, also d/b/a PDA Group LLC; Prizm Debt Solutions, LLC, also d/b/a PDS LLC; Samuel Sole and Associates, also d/b/a SSA Group LLC and Imperial Processing Solutions; Charles Glander; and Jacob E. Kirbis.

The FTC alleged that the defendants: (1) impersonated law enforcement officials or process servers; (2) threatened to have consumers arrested for nonpayment; (3) falsely threatened consumers with lawsuits and wage garnishment; and (4) withheld information consumers needed to confirm or dispute debts.

The defendants have agreed to a stipulated order for permanent injunction that: (1) bans them from debt collection activities; (2) prohibits them from misrepresenting material facts about financial-related products and services; and (3) prohibits them from profiting from their former customers’ personal information. A judgment of $2,229,756, representing the amount of the defendants’ debt collection revenue, will be partially suspended upon the surrender of certain personal assets, including real estate.

Warrant Enforcement Division. Municipal Recovery Services Corporation, d/b/a Warrant Enforcement Division, and its owner, Marcos Nieto, a/k/a Mark Nieto have agreed to settle FTC charges that they violated the FTC Act when they: (1) sent consumers letters and postcards that falsely implied that they had come from a municipal court; and (2) falsely threatened consumers with arrest if they did not pay while collecting overdue debts for local governments in Texas and Oklahoma.

Under a proposed stipulated order for permanent injunction, the defendants are prohibited from mispresenting any material fact while collecting debts, including that a failure to pay a debt will result in: (1) the consumer being arrest or jailed; (2) the consumer’s vehicle being impounded; or (3) the inability to renew a driver’s license.

The order imposes a $194,888 judgment that is suspended based on the defendants’ inability to pay. If the defendants are found to have mispresented their financial condition, the full judgment will become due immediately.

William, Scott & Associates. In November 2015, the FTC was granted a permanent injunction against the final defendant, Chris Lenyszyn, in its case against William, Scott & Associates. He was also ordered to pay more than $565,000 for using deception and threats to collect on phantom payday and other loan “debts’ that consumers did not owe.

An earlier order banned John Williams, Williams, Scott & Associates, LLC, and WSA, LLC from debt collection and ordered them to pay $3.9 million.

Additional actions. Since Operation Collection Protection was announced in November 2015: (1) the Consumer Financial Protection Bureau has resolved four law enforcement actions; (2) the Minnesota Department of Commerce signed consent orders against Collect Pros and Service Investment Company and convinced a court to impose receivership on CLX/Westwood Management, Inc; (3) the Colorado Department of Law denied Collect Pro’s renewal application, denied 4-Star Resolution’s license application, and took action against PC Legal Services for engaging in collection practices without a license; (4) the Indiana Attorney General entered into an assurance of voluntary compliance with Collect Pros; and (5) the Massachusetts Attorney General’s office sued Lutstig, Glaser & Wilson PC, one of the largest debt collection law firms in the state, and its owners.

News: ConsumerProtection FederalTradeCommissionNews