FTC debuts debt collection crackdown with 30 actions

November 5, 2015

WASHINGTON (11/5/15)--Thirty new law enforcement actions involving abusive debt collection practices were announced Wednesday by the Federal Trade Commission (FTC), part of a new nationwide crackdown.

Operation Collection Protection includes is the first coordinated federal-state enforcement initiative targeting debt collectors that use illegal tactics.

According to the FTC, 115 total actions have been taken against debt collectors this year by the agency and more than 70 of its law enforcement partners.

Some of these actions allege that collectors knowingly attempted to collect so-called phantom debts--phony debts that consumers do not actually owe. The illegal practices targeted by authorities also include the failure of some collectors to give consumers legally required disclosures and notices, or to follow state and local licensing requirements.

Wednesday’s actions included announcements of five new enforcement actions against debt collectors allegedly involved in abusive practices.

Those include actions against:

  • BAM Financial, which the FTC has alleged extracted payments from consumers through intimidation, lies and other unlawful tactics. It allegedly unlawfully disclosed debts to, or harassed, third parties, failed to identify itself as a debt collector and failed to notify consumers of their right to receive verification of the purported debts;
  • Delaware Solutions, which a joint action by the FTC and the Attorney General of the State of New York, has been charged with attempting to collect on debts it knew were bogus. The defendants bought payday loans supposedly owed to a company that repeatedly told them to stop collection efforts because the debts were invalid, and ignored consumers’ evidence that they had never authorized a payday loan;
  • K.I.P. LLC, a phantom debt collection scheme based in Aurora, Ill.  A married couple allegedly who ran this scheme have agreed to a $6.4 million judgment and a ban on working in any debt collection business. The FTC and Illinois Attorney General charged K.I.P.’s Charles and Chantelle Dickey with threatening and intimidating consumers to pay payday loan debts they either did not owe, or did not owe to the defendants; and
  • National Check Registry, which agreed to a ban on participating in any debt collection business to settle charges brought by the FTC and the New York Attorney General’s Office in June 2014 that the defendants used lies and false threats to collect millions of dollars from consumers.

The fifth complaint was filed under seal, and thus cannot be disclosed by the FTC.

With the settlements announced Wednesday, the FTC’s total secured final judgments in seven cases this year have placed 33 defendants under strict federal court orders, secured more than $88 million in judgments and banned 24 defendants from working in debt collection.