At the request of the Federal Trade Commission, a U.S. district court has halted an operation based in Atlanta and Cleveland that allegedly used deceptive and threatening tactics to collect phantom payday loan “debts” that consumers either did not owe, or did not owe to the defendants.  The court order freezes the defendants’ assets to preserve the possibility of providing redress to consumers, and appoints a receiver.

According to the FTC, the defendants operated under a host of fictitious business names that implied an affiliation with a law firm or a law enforcement agency, such as Global Legal Services, Allied Litigation Group, United Judgment & Appeals, Dockets Liens & Seizures, and United Judgment Center.  Using robocalls and voice messages that threatened legal action and arrest unless consumers responded within a few days, the defendants have collected and processed millions of dollars in payment for phantom debts, according to the complaint.  Their practices have generated almost 3,000 complaints to the FTC’s Consumer Sentinel.

According to documents filed with the court, a typical message stated:  “[T]his is the Civil Investigations Unit.  We are contacting you in regards to a complaint being filed against you, pursuant to claim and affidavit number D00D-2932, where you have been named a respondent in a court action and must appear.  There is a contact number on file which you must call, 757-301-4745.  Please forward this information to your attorney in that the order to show cause contains a restraining order.  You or your attorney will have 24 to 48 hours to oppose this matter.”

Working out of offices in Cleveland and Atlanta, the defendants threatened consumers that if they did not pay, their bank accounts would be closed, their wages would be garnished, they would face felony fraud charges, they would have to appear in court thousands of miles from their homes, or they would be arrested at their workplace, according to documents filed with the court.  Many consumers ended up paying the defendants for debts they did not owe because they feared the threatened repercussions of failing to pay, believed the defendants were legitimate and collecting real debts, or simply wanted to stop the harassment, according to the complaint.

The FTC’s complaint names Lisa J. Jeter, Nichole C. Anderson, Hope V. Wilson, Angela J. Triplett, DeMarra J. Massey, and their companies Pinnacle Payment Services, LLC, Velocity Payment Solutions, LLC, Heritage Capital Services, LLC, Performance Payment Processing, LLC, Credit Source Plus, LLC (Ohio), Credit Source Plus, LLC (Georgia), Reliable Resolution, LLC, Premium Express Processing, LLC (Ohio), and Premium Express Processing, LLC (Atlanta).

This is the FTC’s fifth recent case involving allegedly fraudulent, online payday-loan-related operations.  Other cases include American Credit Crunchers, LLC, Broadway Global Master Inc., Pro Credit, and Vantage Funding.

The complaint charges the defendants with violating the FTC Act and the Fair Debt Collection Practices Act by falsely telling consumers that:

• they were delinquent on a payday loan or other debt that the defendants had the authority to collect;
• they had the legal obligation to pay the defendants;
• they would be arrested or imprisoned if they did not pay; and
• the defendants had taken or would take legal action.

The complaint also charges that the defendants illegally called consumers at inconvenient
times or places, including at their workplaces, despite being asked to stop; disclosed supposed debts to family members, employers, and other third parties; harassed consumers with repeated calls; failed to disclose their identity as debt collectors; and failed to provide a required written notice telling consumers how to dispute the alleged debts.

For more consumer information on this topic, see Dealing with Debt.

The Commission vote authorizing the staff to file the complaint was 4-0.  The complaint and request for a temporary restraining order were filed in the U.S. District Court for the Northern District of Georgia, Atlanta Division.  On October 24, 2013 the court granted the FTC’s request.

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 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.