FTC Bans Operators of Debt Collection Scheme from Industry

11/1/2017 9:00 AM

The settlement concludes an investigation into several defendants’ illegal practices initiated under Operation Collection Protection in 2016.


The Federal Trade Commission has reached a settlement against more defendants as part of its Operation Collection Protection initiative targeting companies engaging in deceptive and abusive debt collection practices.

Under the latest settlement, the operators behind a “fake debt collection scheme” have been banned from the debt collection business and selling debt portfolios, according to a news release from the FTC. The Illinois Attorney General partnered with the FTC to reach the settlement.

It stems from a complaint for a permanent injunction issued by the United States District Court for the Northern District of Illinois – Eastern Division, on behalf of the FTC in March 2016, ACA International previously reported. The debt collection scam targeted both consumers and collection agencies through the alleged sale of fake debt portfolios and threatened consumers when collecting debts on payday loans they did not owe.

The FTC and Illinois Attorney General filed the complaint in the case against several companies and three individuals using names such as Stark Recovery, Stark Law and Capital Harris Miller & Associates through Operation Collection Protection in 2016.

The defendants are required to surrender at least $9 million in assets, which will be returned to consumers, according to the FTC.

“Since 2015, according to the FTC’s complaint, they pretended to be a law firm with authority to sue and obtain substantial judgments against delinquent consumers. They also allegedly provided bogus payday loan debt portfolios to other debt buyers, who then tried to collect the fake debts,” according to the FTC’s news release.

The settlement orders also prohibit the defendants from “misrepresenting financial products and services, profiting from customers’ personal information collected as part of the challenged practices, and failing to dispose of such information properly.”

ACA maintains that legitimate debt collectors operate lawfully and respectfully and take great efforts to ensure compliance. On the other hand, fraudulent and unlawful actors posing as debt collectors have no interest in complying with the law; instead they harm consumers and generate a mistrust of debt collectors which unfairly tarnishes the entire industry. 

It is critical that the FTC continue to prioritize egregious conduct and debt collection scam operations that cause the most harm to consumers, and differentiate those bad actors from the overwhelming majority of debt collectors who operate lawfully, take consumer protection seriously and play a unique and much-needed role in our credit-based economy.

ACA International supports industry and law enforcement efforts to target these bad actors and eradicate them from the consumer financial marketplace.  ACA has long led the effort to stop criminal debt collection activity and has worked consistently with the FTC and other regulators to help them understand the complex issues that legitimate debt collectors face.

ACA also looks forward to continuing to work with the FTC and other government agencies to continue to rid the marketplace of bad actors who have no intention of complying with the law, causing substantial harm to consumers and legitimate debt collectors.

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