Consumer Finance Insights
February 8, 2019

FTC Wins TRO Against Phantom Debt Collection Scheme

On February 8, 2019, the Federal Trade Commission (FTC) announced that the U.S. District Court for the Western District of North Carolina granted its motion for a temporary restraining order (TRO) against 10 debt collection companies and six individuals operating out of New York and North Carolina.  The FTC alleged ​that defendants operated a debt collection scheme by falsely holding themselves out as attorneys, or as affiliated with attorneys, in order to press consumers into paying debts that they did not have.  According to the FTC, defendants also threatened legal action against consumers if they did not make payments.  The FTC claims that defendants’ actions were unfair or deceptive acts or practices in violation of the Federal Trade Commission Act (FTC Act), 15 U.S.C. § 45(a), and further violated​ the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692-1692p.

The TRO freezes the assets of defendants, appoints a temporary receiver, and orders an accounting of all defendants’ records that describe debts or alleged debts.  The FTC’s complaint, filed on February 4, 2019, further seeks a permanent injunction against future violations, consumer redress and restitution, and enforcement costs.

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