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From Banking and Finance Law Daily, February 27, 2015

FTC, NY AG seek to halt abusive debt collectors

By Colleen M. Svelnis, J.D.

In a joint operation, the Federal Trade Commission and the New York Attorney General’s office have temporarily shut down two abusive debt collection operations centered in New York that target consumers nationwide. The complaints against 4 Star Resolution and Vantage Point Services were filed in the Western District of New York along with requests for a temporary restraining order (TRO) with asset freeze, appointment of receiver, and other equitable relief.

Jessica Rich, Director of the FTC’s Bureau of Consumer Protection, said the “cases announced today will help protect consumers from debt collectors that disregard the law in an attempt to make a buck.”

“Today’s action should make it clear that nobody is above the law, and when shady debt collectors engage in illegal and abusive business practices, they will be held accountable,” New York Attorney General Eric T. Schneiderman said. “The use of threats, including the threat of arrest, to collect debts is unconscionable, and I am pleased to partner with the FTC to stand up for consumers against these bad actors.”

4 Star Resolution LLC. The complaint against 4 Star Resolution LLC and its aliases, along with individual defendants Travell Thomas, Maurice Sessum, and Charles Blakely III alleges that since at least 2009, 4 Star has used deceptive and abusive tactics to pressure consumers into making payments on purported debts.

According to the complaint, the debt collectors regularly called consumers using fictitious addresses, bogus company names, and spoofed phone numbers. After misrepresenting their identity, 4 Star’s collectors falsely identified themselves to consumers, claiming that they were attorneys, process servers, government agents, or criminal law enforcement officials.

Tactics described include misrepresenting that consumers have committed “bank fraud,” or “check fraud,” and claiming that consumers will face dire consequences like arrest and imprisonment an immediate payment is made over the phone. If they could not reach a consumer, they typically left a message alleging possible litigation pending against them, and saying the consumer has 48 hours to call back.

Additionally, the complaint alleges that the debt collectors failed to provide consumers with statutorily-required disclosures and notices that would assist consumers in verifying and, where appropriate, challenging the alleged debts.

The complaint also alleges that 4 Star unlawfully disclosed information about supposed debtors to third parties, including friends, family members, and employers, and illegally used abusive and profane language against consumers.

Vantage Point Services, LLC. The complaint and memorandum in support of the TRO allege that the New York and Florida based debt collection agency terrorized consumers who paid them over $21 million in revenue because they believed it was the only way to avoid arrest or imprisonment. Four individual employees of Vantage Point Services are also cited in the complaint—Megan Vandeviver, Greg MacKinnon, Angela Burdorf, and Joseph Ciffa. According to the complaint, the debt collection operation violates the Federal Trade Commission Act, Fair Debt Collection Practices Act, as well as New York consumer protection laws.

According to the complaint, unlawful tactics used by the collection agency include:

  • using false or deceptive representations, including false threats of arrest;

  • pressuring consumers into making hasty decisions, regularly claiming that pending arrest warrants will be issued in a matter of hours-or even minutes- if the consumers do not pay;

  • telling putative debtors' friends, relatives, family members, and coworkers that the putative debtors have committed a felony, and are facing arrest unless a debt is paid in short order.

  • specifying consequences consumers will face upon nonpayment such as a mandatory minimum of 120 days in jail;

  • claiming to be affiliated with law enforcement agencies that are local to the consumer;

  • failing to provide statutorily required information to consumers; and

  • charging illegal processing fees.

Companies: 4 Star Resolution LLC; Check Solutions Services, Inc.; Check Fraud Service LLC; Consumer Recovery Group; Four Star Capital Services; Four Star Resolution Services, LLC; Fourstar Revenue Management LLC; FS Mediation Group; International Recovery Service LLC; Merchant Recovery Service, Inc.; Profile Management, Inc.; Vantage Point Services, LLC

MainStory: TopStory DebtCollection EnforcementActions NewYorkNews UDAAP

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