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FTC Orders a Stop to Collection of Phantom Payday Loans

On Behalf of | Nov 1, 2013 | Consumer Protection

Collection of phantom payday loans is recently becoming more of
a common practice for collectors and the Federal Trade Commission (“FTC”) has
investigated the scam and put a stop to a group of fictitious collection
this past week.  Debt collectors are hounding
thousands of consumers nationwide for payday loan debts they don’t
actually owe.

The FTC focused on the scam which appears to target consumers
who applied for payday loans over the internet regardless of
whether or not they took out a loan.  The FTC announced a
lengthy list of collection agencies they ordered to shut their
doors, cease all communication with consumer debtors and pay hefty
fines for their blatant violations
of the Fair Debt Collection Practices Act
(“FDCPA”).  A
list of these fictitious agencies based mostly in Georgia and Ohio
include Pinnacle Payment Services LLC, Velocity Payment Solutions
LLC, Heritage Capital Services LLC, Performance Payment Processing
LLC, Credit Source Plus LLC, Credit Source Plus LLC, Reliable
Resolution LLC, Premium Express Processing LLC, and Premium Express
Processing, LLC.

In response to almost 3,000 complaints received from consumers,
the FTC launched a formal investigation.  Based on their
findings, the FTC filed a formal complaint alleging that these
collection agencies operated under fictitious business names that
led debtors to believe they were affiliated with a law firm or law
enforcement, a clear violation of the FDCPA.  The collectors
used robo-calls and voice mail messages threatening to take legal
action against the debtors and threatening to arrest the debtors if
payment was not received within a few days time, a process that was
extremely successful and coerced fearful debtors into making
payment on debts they did not in fact owe.

The complaint further alleged, the collectors threatened to drain
debtors’ bank accounts and garnish their wages.  Collectors
threatened to file felony charges against debtors for refusal to
pay and to arrest debtors at their place of employment and to drag
them into legal proceedings that would be costly and located far
from their homes, all actions which of course are in
violation of the FDCPA.

Taking advantage of thousands of unsuspecting consumers is
exactly the reason the FTC and Consumer
Financial Protection Bureau
have targeted their efforts on
stopping collection agencies from violating the law.  If you
have been the victim of a scam debt collector and need the advice
and assistance of counsel, contact SmithMarco P.C. for a free case review.