Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Debt collectors agree to pay $4 million, to leave industry in settlement of FTC charges, (May 21, 2014)

By Linda O’Brien, J.D., LL.M.

Asset & Capital Management Group, a southern California based debt collection operation, has agreed to pay more than $4 million for consumer redress to settle FTC charges that it extorted payments from consumers using false threats, the Commission announced today. The defendants behind the operation will turn over their personal assets and give up any claim to the business assets, under the FTC settlements. They also are banned from the debt collection industry.

The FTC, in its complaint filed in the U.S. District Court for the Central District of California (FTC v. Asset & Capital Management Group, File No. 122-3031), alleged that defendants used a network of interrelated companies and dozens of fictitious names to illegally extract payments from consumers for credit card debt that they had purchased from creditors. According to the FTC, the defendants employed an assortment of deceptive and abusive practices in collecting on the credit card debt, violating both the FTC Act and the Fair Debt Collection Practices Act (FDCPA).

The FTC charged that the defendants posed as process servers in telephone calls to consumers and third parties; falsely threatened consumers with lawsuits, wage garnishment, seizure of their property, and arrest; and disclosed debts to consumers’ employers, colleagues, and family members. The FTC also alleged that the defendants violated the FDCPA by failing to tell consumers they were attempting to collect a debt, and failing to notify consumers of their right to dispute and obtain verification of their debt.

At the FTC’s request, the federal court in Los Angeles halted the operation in July 2013, froze the defendants’ assets, and appointed a receiver to take charge of the defendants’ business.

The settlements resolving the case impose judgments totaling $90.5 million. The judgments against the companies’ owners and officers—Thai Han, Jim Tran Phelps, Keith Hua, and James Novella—will be suspended when they surrender their personal assets. The proceeds from those assets, in addition to corporate funds held by the receiver that total more than $4 million, which will be used to provide refunds to consumers. The settlement orders also prohibit them from misrepresenting any relevant fact in connection with promoting or selling credit repair, debt relief, mortgage assistance relief, or lending services.

“Consumers shouldn’t be subjected to threats and intimidation,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “We’re pleased that victims of this scheme will be getting money back from the defendants.”

The Commission vote approving the proposed settlements was 4-0.

Companies: Asset & Capital Management Group

News: ConsumerProtection FederalTradeCommissionNews