March 13 --A debt collection operation must refrain from misrepresenting that it is with the government and from threatening consumers with legal action, including arrest, according to a temporary restraining order with an asset freeze entered by the U.S. District Court for the Western District of New York at the request of the Federal Trade Commission (FTC v. Federal Check Processing, Inc., W.D.N.Y., No. 1:14-cv-00122-WMS, 2/24/14).
The TRO stops the illegal conduct, freezes the operation's assets, appoints a temporary receiver to take over the defendants' business and grants immediate access to the business premises and limited discovery to the FTC pending a March 17 hearing.
The defendants--two individuals, Mark Briandi and William Moses, and 13 interrelated companies--are named as defendants. The commission also included another company--Empowered Racing LLC--as a relief defendant; it was not actively involved but profited from the scheme. The corporate defendants are: Federal Check Processing, Inc.; Federal Recoveries, LLC; Federal Processing Services, Inc.; United Check Processing, Inc.; Central Check Processing, Inc.; Nationwide Check Processing, Inc.; American Check Procesing, Inc., also known as American Check Processing, Inc.; State Check Processing, Inc.; Check Processing, Inc.; US Check Processing, Inc., also known as U.S. Check Processing, Inc.; and Flowing Streams, F.S., Inc.
“These debt collectors took deception to new lows,” Jessica Rich, Director of the FTC Bureau of Consumer Protection, said.
“They bullied consumers, falsely accused them of crimes, and pretended to be government officials. Stopping their illegal activity is a real victory for consumers,” she said.
The commission complaint alleged violations of FTC Act §5, 15 U.S.C. §45, and Fair Debt Collection Act (FDCPA) §807, 15 U.S.C. §1692e.
The FTC described the defendants as debt buyers who collected debts owed to other companies, and noted that most of these debts originated from payday loans. During their attempts to collect on the debts, the complaint alleged that the defendants falsely represented themselves as “affiliated with the United States or any State, including government law enforcement agencies.” The commission reported that some of the company names “suggested a government affiliation or national presence, such as Federal Recoveries, LLC, Federal Check Processing, Inc., Federal Processing Services, Inc., Nationwide Check Processing, and State Check Processing, Inc.”
The defendants allegedly also threatened consumers with legal action--including lawsuits, arrest and imprisonment or seizure of assets if they refused to make payments immediately.
The commission alleged that the defendants used similar tactics on consumers' family members, friends, coworkers and employers, in addition to revealing the consumers' debts to these third parties.
Consumers interviewed by the FTC told the agency that the defendants routinely refused to provide information about the debt, which is required by federal law. The defendants also refused to investigate the debt's legitimacy--even after being told by consumers that they did not owe the debt, the debt had been paid in full or the defendants did not have the authority to collect on the debt.
The FTC estimated that the defendants collected millions of dollars from consumers using these unlawful tactics and that they have been operating the scheme since at least May of 2010.
The agency acknowledged the assistance received from the Buffalo Regional Office of the New York State Attorney General and the Consumer Protection Section of the Colorado Department of Law.
The commission vote authorizing to file the complaint was 4-0.
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The complaint is available at http://www.ftc.gov/system/files/documents/cases/140313unitedcheckcmpt.pdf.
The temporary restraining order is available at http://www.ftc.gov/system/files/documents/cases/140313unitedchecktro.pdf.
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