Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: FTC halts “phantom” debt collection operation, (Apr 13, 2015)

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

In response to an FTC complaint, the federal district court in Chicago has temporarily halted K.I.P., LLC, a Chicago-area company, Charles Dickey, the company’s owner, and Chantelle Dickey, the company’s manager, from operating a fake debt collection scam, the agency announced on April 10. This case is the FTC’s seventh “phantom” debt collector matter (FTC v. K.L.P., LLC, Case No. 1:15-CV-02985).

According to the complaint, the defendants have, since at least 2010, targeted consumers who obtained or applied for payday or other short-term loans, pressuring them into paying debts that they either did not owe or that the defendants had no authority to collect, by threatening to: (1) garnish their wages; (2) have their drivers’ licenses revoked; (3) have them arrested or imprisoned; or (4) have a lawsuit filed against them.

The complaint charges that consumers were not provided with a notice containing: 1) the amount of the debt; 2) the name of the creditor to whom the debt is owed; 3) a statement that the debt will be assumed to be valid unless the consumer disputes it; 4) a statement that if the debt is disputed in writing, the defendants will verify the debt is correct; and 5) a statement that, upon written request, the defendants will provide the consumer with the name and address of the original creditor if different from the current creditor.

The complaint also charges that the defendants: (1) called consumers at work when they knew such calls were prohibited by consumers’ employers; (2) harassed and abused consumers; (3) used obscene or profane language; and (4) repeatedly called consumers repeatedly with the intent of annoying or abusing them.

Finally, the complaint alleges that the defendants’ actions violated the Illinois Consumer Fraud and Deceptive Business Practices Act and the Illinois Collection Agency Act, and that the defendants are not licensed debt collectors as required by Illinois law.

In addition to the temporary restraining order halting the practices charged by the FTC, the defendants’ assets were frozen and a temporary receiver was appointed to take control of the business.

Companies: K.I.P., LLC; d/b/a Ezell Williams and Associates, Corp.; Ezell Williams, LLC; Excel Receivables, Corp.; Second Chance Financial Credit, Corp.; Second Chance Financial, LLC; Payday Loan Recovery Group, LLC; Payday Loan Recovery Group; Payday Loan Recovery; International Recovery Services, LLC; International Recovery Services; and D&R Recovery.

News: ConsumerProtection FederalTradeCommissionNews