FTC Charges Debt Collection Operation Took Consumers’ Money for Phantom Debts

The Federal Trade Commission has charged a North Carolina debt collection operation with using intimidation and deception to take money from consumers for debts they did not owe, or that the defendants had no right to collect. A federal court temporarily halted the scheme and froze its assets at the request of the FTC, which seeks to end the practices.

According to the FTC, the defendants used a variety of trade names that sound like law firms, such as Lombardo, Daniels & Moss; Barron, Gibson & Phillips; and Cohen, Daniels & Moss, to attempt to collect debts that consumers did not owe. The FTC’s complaint alleges that the defendants’ collectors claimed that consumers were delinquent on payday loans or other debts, and threatened them with arrest or other formal legal action if they did not pay. Their collectors also allegedly called consumers repeatedly and regularly used profanity. Many people paid – more than $2.1 million in total – because they believed the defendants’ false claims or just to stop the harassment.

The FTC also alleges that the defendants illegally disclosed purported debts to third parties, failed to disclose that they were debt collectors calling to collect a debt and that any information consumers provided could be used for that purpose, and failed to send consumers legally required written notices with the debt amount and the creditor’s name, giving consumers an opportunity to dispute the debt.

Lombardo, Daniels & Moss LLC, Dion Barron, and Charles R. Montgomery III are charged with violating the FTC Act and the Fair Debt Collection Practices Act.

The FTC appreciates the assistance provided in this case by the Better Business Bureau of Southern Piedmont and Western North Carolina.

The Commission vote approving the complaint was 2-0. The U.S. District Court for the Western District of North Carolina, Charlotte Division, entered a temporary restraining order against the defendants on August 24, 2017.

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 to promote competition, and protect and educate consumers. You can learn more about consumer topics and file a consumer complaint online or by calling 1-877-FTC-HELP (382-4357). Like the FTC on Facebook, follow us on Twitter, read our blogs and subscribe to press releases for the latest FTC news and resources.