Consumer Finance Insights
August 30, 2016

FTC Bars New York Debt Collector and Companies from Future Debt Collection

On August 24, 2016, the Federal Trade Commission (FTC) announced that the FTC and the Attorney General for the State of New York (New York AG) reached a settlement with a New York debt collector that will ban the owner and his companies from the debt collection business.  The action was part of Operation Collection Protection.

The stipulated final order was filed on August 18 in the United States District Court for the Western District of New York.  The order resolves allegations of deceptive and abusive debt collection practices in violation of Section 5 of the FTC Act, 15 U.S.C. § 45, the FDCPA, 15 U.S.C. § § 1692-1692p, and New York General Business Law Article 22-A.  The action was originally brought against the individual defendant and his companies in 2015.  Specifically, the FTC and the New York AG alleged that defendant collected on fake payday loans using deceptive and abusive tactics to get consumers to pay.  According to the FTC, these tactics included false threats of lawsuits and arrest.

The order bans the defendant from future debt collection activities, prohibits future misrepresentations relating to any good or service, and prohibits him from profiting from consumers’ personal information or by failing to dispose of it properly.  The order imposes a judgment against defendant of more than $18.4 million that will be partially suspended due to his inability to pay.  The order also imposes a judgment of $418,000 against the debt collector’s ex-wife as a result of her profits from the alleged scheme.  That judgment will also be partially suspended due to her inability to pay.