COURT ORDERS HALT TO DEBT COLLECTOR'S PRACTICES AND ASSET FREEZE

FROM:  FEDERAL TRADE COMMISSION

At FTC's Request, Court Orders Halt to Debt Collector's Illegal Practices, Freezes Assets

Defendants Allegedly Broke the Law by Posing as Process Servers, Threatening Lawsuits, and Contacting Consumers’ Employers and Family Members in Violation of Their Privacy

At the request of the Federal Trade Commission, a U.S. district court has halted a debt collection operation that allegedly extorted payments from consumers by using false threats of lawsuits and calculated campaigns to embarrass consumers by unlawfully communicating with family members, friends, and coworkers.  The court order stops the illegal conduct, freezes the operation’s assets, and appoints a temporary receiver to take over the defendants’ business while the FTC moves forward with the case.

The lawsuit, part of the FTC’s continuing crackdown on scams that target consumers in financial distress, charged four individuals and seven companies.  The FTC alleged that the defendants were part of an elaborate debt collection scheme operating from locations in Orange and Riverside counties in California, and that they used various business names including Western Performance Group, as well as fictitious names, which they changed frequently to avoid law enforcement scrutiny.

The FTC alleged that the defendants called consumers and their employers, colleagues, and family members posing as process servers or law office employees, and claimed they were seeking to deliver legal papers that purportedly related to a lawsuit.  In some instances, the defendants threatened that consumers would be arrested if they did not respond to the calls.  But the debt collectors were not process servers or law office employees, and the defendants did not file lawsuits against the consumers.  The FTC charged that the defendants’ false and misleading claims violated the FTC Act and the Fair Debt Collection Practices Act.  In addition, the FTC alleged that the defendants violated the Fair Debt Collection Practices Act by:

improperly contacting third parties about consumers’ debts; failing to disclose the name of the company they represented, or the fact that they were attempting to collect a debt, during telephone calls to consumers; and failing to notify consumers of their right to dispute and obtain verification of their debts.

The complaint names as defendants Thai Han; Jim Tran Phelps; Keith Hua; James Novella; One FC, LLC, also doing business as Western Performance Group and WPG; Credit MP, LLC, also doing business as AFGA, CMP, AFG & Associates, AF Group, Allied Financial Group, and Allied Guarantee Financial; Western Capital Group, Inc., also doing business as ERA, LMR, WCG, and WC Group; SJ Capitol LLC, also doing business as SCG; Green Fidelity Allegiance, Inc., also doing business as WRA; Asset and Capital Management Group; and Crown Funding Company, LLC.

The Commission vote authorizing the staff to file the complaint was 4-0.  The FTC filed the complaint and the request for a temporary restraining order in the U.S. District Court for the Central District of California.  On July 24, 2013, the court granted the FTC’s request for a temporary restraining order.  The Federal Trade Commission would like to thank the U.S. Postal Inspection Service for its assistance in bringing this case.

FTC SETTLES CHARGES WITH WORLD'S LARGEST DEBT COLLECTOR

FROM: FEDERAL TRADE COMMISSION 
  
World's Largest Debt Collection Operation Settles FTC Charges, Will Pay $3.2 Million Penalty
Largest Civil Penalty Ever Obtained by the FTC Against a Third-party Debt Collector

The world’s largest debt collection operation, Expert Global Solutions and its subsidiaries, has agreed to stop harassing consumers with allegedly illegal debt collection calls and to pay a $3.2 million civil penalty – the largest ever obtained by the Federal Trade Commission against a third-party debt collector.

In its complaint, the FTC charged that the companies violated the Fair Debt Collection Practices Act and the FTC Act by using tactics such as calling consumers multiple times per day, calling even after being asked to stop, calling early in the morning or late at night, calling consumers’ workplaces despite knowing that the employers prohibited such calls, and leaving phone messages that disclosed the debtor’s name, and the existence of the debt, to third parties.  According to the FTC’s complaint, the companies also continued collection efforts without verifying the debt, even after consumers said they did not owe it.

Under the proposed order, whenever a consumer disputes the validity or the amount of the debt, the defendants must either close the account and end collection efforts, or suspend collection until they have conducted a reasonable investigation and verified that their information about the debt is accurate and complete.  The proposed order also restricts situations in which the defendants can leave voicemails that disclose the alleged debtor’s name and the fact that he or she may owe a debt.

Also under the proposed order, the defendants must:  stop falsely representing that they will not call a number to collect a debt; not harass, oppress, or abuse a consumer while attempting to collect a debt; not communicate with third parties about a consumer’s debt; not communicate with a consumer at his or her workplace if it is clearly inconvenient or prohibited by the consumer’s employer; except in limited circumstances, cease communications if a consumer has requested no further contact or if a consumer refuses to pay a debt; and not violate any provision of the Fair Debt Collection Practices Act.  The defendants also are required to record at least 75 percent of all their debt collection calls beginning one year after the date of the order, and retain the recordings for 90 days after they are made.

With more than 32,000 employees and revenues in 2011 of more than $1.2 billion, the Texas-based Expert Global Solutions and its subsidiaries – ALW Sourcing, LLC; NCO Financial Systems, Inc.; and Transworld Systems, Inc., which also does business as North Shore Agency, Inc. – collectively are the largest debt collector in the world.  In addition to their U.S. offices, the companies operate in Canada, Barbados, India, the Philippines, and Panama.

For consumer information about dealing with debt collectors, see Debt Collection.

The Commission vote to authorize the staff to refer the complaint to the Department of Justice and to approve the proposed consent decree, was 4-0.  The DOJ filed the complaint and proposed consent decree on behalf of the Commission in U.S. District Court for the Northern District of Texas on July 8, 2013.  The proposed consent decree is subject to court approval.

NOTE:  The Commission authorizes the filing of a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest.  Consent decrees have the force of law when signed by the District Court judge.