FTC Reaches Settlement With Collectors of Phantom Debt

June 4, 2018

The Federal Trade Commission just announced a settlement with a debt collection operation based in North Carolina for trying to collect phantom debts that were not actually owed. In addition to getting judgments against the defendants for millions of dollars, the settlement bans them from future debt collection activities and from buying debts from other parties.

The FTC’s August 2017 complain t charged the defendants with a variety of deceptive practices, including the following:

  • Using business names that made it sound as though the consumer’s debt was delinquent and had been referred to a law firm for collection. The defendants weren’t lawyers, but used names like Lombardo, Daniels & Moss and Montgomery, Hunter & Associates when they made debt collection calls  consumers.
  • Attempting to collect debts without having the legal authority to do so.
  • Falsely telling consumers they owed debts that were not actually owed (for example, the debt was owed by another person or had already been paid).
  • Threatening that consumers would be arrested and sent to prison if they did not pay a debt.
  • Using profane and abusive language.
  • Calling consumers multiple times a day, or over an extended period of time or calling after 9 pm.
  • Calling third parties and telling them the consumer owed a debt.
  • Failing to provide legally required notices.

This case is a good example of the types of illegal debt collection activities that some sleazy debt collection companies engage in.

If you receive a call from someone claiming you owe a debt, don’t assume you do or that the person calling you has the right to collect it. And never give out any personal information over the phone during an initial call, like your bank account or credit card number.

Debt collectors are required by law to send you a written notice with certain information concerning an allege debt within 5 days of their initial communication with you. You also have a right to notify the collector in writing that you dispute the debt. If you do dispute a debt in writing, the collector has to stop trying to collect it until it contacts the creditor and validates that you owe the debt.

Keep in mind that you may have valid defenses to any attempt to collect a debt, even its owed. If a debt collector engages in the kind of conduct described above, you may also have the right to assert a counterclaim if you’re sued.

Don’t hesitate to contact me if you find yourself in any of these situations.

 

 

 

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