Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Collectors of bogus debts banned from debt collection business, (Sep 16, 2015)

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

Under a settlement with the FTC, the operators of a fraudulent debt collection scheme will be banned from the debt collection business. The stipulated order resolves an FTC complaint against Kirit Patel, Broadway Global Master Inc., and In-Arabia Solutions Inc. that they illegally processed more than $5.2 million in payments from consumers for payday loan debts that were not owed (FTC v. Broadway Global Master, FTC Matter 1123215).

The FTC’s complaint alleged that callers working with the defendants harassed consumers into paying on bogus debts, often pretending to be agents of law enforcement or fake government agencies such as the “Federal Crime Unit of the Department of Justice.” The court subsequently halted the operation and froze the defendants’ assets pending litigation

In addition to banning the defendants from the debt collection business, the FTC’s settlement order also:

• prohibits the defendants from making misrepresentations about any product or service, profiting from customers’ personal information, or failing to properly dispose of customer information; and

• imposes a judgment of more than $4.3 million. Due to the defendants’ inability to pay, the amount will be suspended upon payment of $608,500, which will be used for consumer redress. The full judgment will become due immediately if the defendants are found to have misrepresented their financial condition.

In a separate criminal proceeding, Patel pleaded guilty to mail and wire fraud charges brought by the U.S. Department of Justice and was sentenced to a one-year prison term.

News: ConsumerProtection FederalTradeCommissionNews