Another Debt Collection Scam Comes to an End

This is yet another news item on a settlement with the Federal Trade Commission ( FTC ) regarding deceptive and or fraudulent collection practices by a debt collector.  This settlement from a debt collection agency was sizeable.  In this case, the settlement outcome included leaving the FTC with $1.6 million in recovered funds to distribute to thousands of consumers who were scammed into paying money they did not owe by con artists who threatened, harassed and lied to them.  Collection agencies may not harass consumers, lie, or use unfair practices when they try to collect a debt. 

Abusive collection actions are illegal, and if debt collectors use abusive tactics they could face legal action.  The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices as they may apply to debt collectors. 

According to an FTC press release, the FTC sued three companies, operating under the name National Check Control, charging them with harassing and abusing consumers, falsely threatening criminal prosecution, illegally communicating with third parties, collecting amounts that were not due, and other violations of federal laws.  In 2005, the court ordered a permanent halt to their operations and ordered them to pay redress to the consumers they had bilked.  The defendants in the case subsequently unsuccessfully appealed the case to the Third Circuit Court of Appeals and the Supreme Court.

On February 7, 2008, one day after the appeals court refused to reconsider his appeal, one of the defendants removed from a bank safe deposit box coins valued at $335,000 that the federal court had ordered to be turned over to the FTC for consumer redress.  A federal jury convicted him of two felony counts – theft of government property and obstruction of justice.  In October 2009, he was sentenced to 41 months in federal prison and is currently serving his sentence.

The FTC recovered a total of $1.6 million for consumer redress.  The funds will be distributed to 24,916 consumers who each lost $100 or more as the result of the defendants’ illegal actions.  The consumers have been identified based on records obtained in the case.  Consumers are scheduled to begin receiving checks in February 2010.

The Commission also has recently been taking more actions against the individuals, and not just the companies, responsible for illegal collection practices.

The FTC enforces illegal debt collection practices as well as those involving credit repair services and credit report issues.