Consumer Finance Insights
July 28, 2017

FTC Obtains Temporary Restraining Order Freezing Assets of Debt Collection Operation

​On July 10, 2017, the U.S. District Court for the Middle District of Florida entered a temporary restraining​ order (“TRO”) halting operations and freezing the assets of a debt collection operation, at the request of the Federal Trade Commission (“FTC”)​.

The FTC charged the defendant company and individuals with violating Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§​ 1692-1692p.  The FTC alleged that the debt collectors called consumers without identifying themselves as debt collectors and falsely told consumers that criminal actions were being commenced against them.  According to the FTC, the callers posed as attorneys and coerced a number of consumers to pay phantom debts in order to avoid arrest.  The FTC further alleged that the defendants posed as legitimate small businesses, which may have harmed those entities’ reputations and customer relations.

The federal court found good cause to believe the defendants had violated the FTC Act and the FDCPA and were likely to continue engaging in such violations, warranting the TRO.  The Court also determined that an asset freeze was required to prevent the concealment or transfer of assets, which could damage the Court’s ability to grant effective final relief for consumers in the form of monetary restitution or disgorgement of ill-gotten gains.