The Federal Trade Commission (FTC) is cracking down on “Phantom” debt collection schemes that go after individuals for money they do not actually owe. The FTC shut down an operation that collected more than $690,000 in fake debts by threatening consumers with lawsuits and arrests, a violation of the Fair Debt Collection Practices Act (FDCPA).
A court order has stopped the business operations of Hardco Holding Group and S&H Financial Group. The debt collection operation is accused of using deceptive and abusive practices to collect fake debts. Since June 2015, the companies and their operators Daryl M. Hall and Dequan M. Sicard illegally collected supposed payday loan and other debts from consumers using the threat of legal action and arrest.
Often, doing business as Alliance Law Group, the companies employed a two-step collection process. The complaint alleges the first step involved calling victims claiming that a lawsuit had been or would soon be filed against them due to an outstanding debt they owe. The victim of the scam would then be provided with a phony case number for reference.
The FTC claims that during most of these calls, the operators of the scheme did not identify themselves as debt collectors. To make the collections seem legitimate, the FTC notes that the collectors would often possess or claim to possess individuals’ personal information, or claim to be from an unrelated, legitimate small business.
The reps advised callers that they could settle the action by making a payment over the telephone using a credit or debit card. If the victim refused to pay immediately, collectors would threaten legal action and arrest. The FTC charged Hardco and S&H Financial with violating the FTC Act and the Fair Debt Collection Practices Act, and seeks to refund individuals affected by the fake debt collection scheme.
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