At the request of the Federal Trade Commission, a U.S. district court halted a debt collection operation that the agency charged with violating the Federal Trade Commission Act and the Fair Debt Collection Act by misrepresenting that they were with the government, falsely accusing consumers of committing check fraud, and then threatening consumers with arrest.
The court order stops the illegal conduct, freezes the operation’s assets, and appoints a temporary receiver to take over the defendants’ business, pending a hearing scheduled for March 17.
“These debt collectors took deception to new lows,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “They bullied consumers, falsely accused them of crimes, and pretended to be government officials. Stopping their illegal activity is a real victory for consumers.”
Part of the FTC’s continuing crackdown on scams that target consumers in financial distress, the lawsuit charged two individuals – Mark Briandi and William Moses – and 13 interrelated companies in connection with the case. Another company – that was not actively involved, but profited from the scheme – was charged as a relief defendant. The defendants allegedly bought debts and collected debts owed to other companies, and much of the debts the defendants collected on had originated from payday loans.
Operating the scheme since at least May of 2010, the defendants portrayed themselves as representatives of the government by using company names that suggested a government affiliation or national presence, such as Federal Recoveries, LLC, Federal Check Processing, Inc, Federal Processing Services, Inc., Nationwide Check Processing, and State Check Processing, Inc.. The defendants threatened consumers with dire consequences – such as lawsuits, arrest and imprisonment or seizure of assets – unless consumers paid the debt immediately.
The defendants repeated these deceptive claims to consumers’ family members, friends, coworkers, and employers, and revealed the consumers’ debts to these third parties as well, the complaint stated. According to consumers interviewed by the FTC, the defendants routinely refused to provide information about the debt, as required by federal law, or to investigate the debt’s legitimacy – even after some consumers explained that they did not owe the debt, the debt had been paid in full, or the defendants did not have the authority to collect on the debt. The defendants allegedly collected millions of dollars from consumers using these unlawful tactics.
In addition to Briandi and Moses, the complaint names as defendants Federal Check Processing, Federal Recoveries, Federal Processing, Federal Processing Services, United Check Processing, Central Check Processing, Central Processing Services, American Check Processing, State Check Processing, Check Processing, Nationwide Check Processing, US Check Processing, and Flowing Streams. The complaint names Empowered Racing LLC as a relief defendant.
The FTC would like to thank the Buffalo Regional Office of the New York State Attorney General and the Consumer Protection Section of the Colorado Department of Law for their assistance with the investigation.
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 Western District of New York. On February 24, 2014, the court granted the FTC’s request for a temporary restraining order with an asset freeze, the appointment of a receiver, immediate access to the business premises and limited discovery.
NOTE: The Commission files 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. The case will be decided by the court.
The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.