FTC Wins $10 Million Judgment Against Fraudulent Debt Collectors

The Federal Trade Commission has won a $10.2 million judgment against a debt- collection operation, National Check Control, and its principals – the estimated amount of consumer injury they caused. The amount represents the largest judgment in FTC history for violations of the Fair Debt Collection Practices Act (FDCPA). In addition, a federal district court judge has permanently banned the defendants from engaging in debt collection in the future.

In a complaint filed in May 2003, the FTC alleged that the defendants violated the FDCPA by harassing and threatening consumers with claims that they owed money for checks returned for insufficient funds. The defendants made repeated phone calls, sent threatening letters, and falsely threatened that consumers could face civil or criminal charges if they did not pay the debts. The FTC alleged that, in many cases, the consumers did not owe the money, or owed far less than the defendants claimed. At that time, the court entered a temporary restraining order freezing the defendants’ assets.

In addition to the ban on debt-collection activities and the $10,204,445 judgment, the court has banned the defendants from violating the FDCPA in the future, including harassing consumers with repeated phone calls, obscene language, or threats of legal action; misrepresenting the amount a consumer owes; failing to notify consumers of their right to dispute the debt; and misrepresenting that the person contacting the consumer is a lawyer. The defendants are further barred from selling or transferring any consumer accounts. In order to satisfy the monetary judgment, the court ordered the defendants to turn over all of their assets. It is not yet clear how much money actually will be available for redress.

The final order for judgment and permanent injunction was entered in the U.S. District Court for the District of New Jersey on July 15, 2005.

The FTC received substantial assistance in pursuing this matter from Postal Inspectors from the North Jersey/Caribbean Division; the U.S. Attorney’s Office for the District of New Jersey; and the New Jersey Department of Law and Public Safety. In addition, the FTC would like to thank the following states for their invaluable assistance in investigating this matter and bringing the complaint: Colorado, Idaho, Maine, Minnesota, North Dakota, Washington, and West Virginia.

Copies of the final order are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov . The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC File No. X030068)
(Civil Action No. 03-2115 (JWB))