FTC Stops Abusive Debt Collection Operation That Threatened Consumers with Legal Action and Arrest for Not Paying ‘Phantom’ Debts

The Federal Trade Commission has halted the abusive debt collection practices of an operation that used fictitious names and threatened consumers into paying debts they may not have owed.

Under settlements with the FTC and a default judgment by the court, Pinnacle Payment Services, LLC and its principals have been barred from debt collection activities and are subject to a $9,384,628 judgment, which has been suspended for most of the defendants, due their inability to pay.

“The Fair Debt Collection Practices Act is designed to ensure that debt collectors do not use abusive tactics to coerce consumers into making payments,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “In this case, Pinnacle threatened many consumers by telling them their bank accounts would be closed, their wages garnished, they would face felony fraud charges, or they would be arrested if they failed to pay the phantom debts. This is unacceptable, and the Commission will act swiftly to stop such flagrant law violations.”

According to an FTC complaint filed in 2013, the Pinnacle defendants, operating out of Atlanta and Cleveland, used fictitious business names that implied an affiliation with a law firm or a law enforcement agency, such as Global Legal Services, Allied Litigation Group, and Dockets Liens & Seizures. Using robocalls and voice messages that threatened legal action and arrest unless consumers responded within a few days, the defendants collected millions of dollars in payment for phantom debts – debts many of the consumers contacted did not owe. Their illegal practices generated nearly 3,000 complaints to the FTC’s Consumer Sentinel database.

Based on their alleged violations of the FTC Act and the FDCPA, on October 24, 2013, the U.S. District Court in Atlanta temporarily stopped the alleged illegal conduct, pending final resolution.

The settlements with the corporate defendants and individual defendants Dorian Wills, Lisa Jeter, Nichole Anderson, Hope Wilson, Demarra Massey, and Angela Triplett and the default judgment against Tobias Boyland ban the defendants from debt collection activities, including helping anyone else engage in debt collection or selling debts. They also are prohibited from making misrepresentations related to the provision of any financial products or services, and must destroy all consumer information they have on file.

The settlements with each defendant except Massey require them, jointly and severally, to pay judgments of $9,384,628, which represents the total consumer injury caused by their allegedly illegal conduct. The settlement with Massey includes a judgment of $1,558,657, which reflects the consumer injury caused during her tenure with the operation. Under the settlements, the monetary judgments against Jeter, Wilson, Anderson, Triplett, and Massey will be partially suspended due to their inability to pay.

The actions announced today settle the FTC’s charges against all of the defendants in this matter. The Commission vote approving each proposed stipulated order was 5-0. The orders and default judgment were entered by the court in the U.S. District Court for the Northern District of Georgia, Atlanta Division. A full list of the defendants in this case can be found on the FTC’s website.

For more information on this phantom debt collection and related issues, see Dealing with Debt on the FTC’s website.

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.