FROM: FEDERAL TRADE COMMISSION
Auto Lender Will Pay $5.5 Million to Settle FTC Charges It Harassed Consumers, Collected Amounts They Did Not Owe
A national subprime auto lender will pay more than $5.5 million to settle Federal Trade Commission charges that the company used illegal tactics to service and collect consumers’ loans, including collecting money consumers did not owe, harassing consumers and third parties, and disclosing debts to friends, family, and employers.
Consumer Portfolio Services, Inc. (CPS), headquartered in Irvine, Calif., agreed to refund or adjust 128,000 consumers’ accounts more than $3.5 million and forebear collections on an additional 35,000 accounts to settle charges the company violated the FTC Act. CPS will pay another $2 million in civil penalties to settle FTC charges that the company violated the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA)’s Furnisher Rule.
“At the FTC, we hold loan servicers responsible for knowing their legal obligations and abiding by them,” said Jessica Rich, director, FTC’s Bureau of Consumer Protection. “The law is very clear: Loan servicers can’t charge consumers more than they owe. And they can’t threaten and harass consumers about delinquent debts.”
The order settling the charges requires CPS to change its business practices to comply with the requirements of the appropriate laws. In addition, the company is required to establish and maintain a comprehensive data integrity program to ensure the accuracy, integrity and completeness of its loan servicing processes, and the data and other information it services, collects or sells. CPS must also provide the FTC with periodic independent assessments of its data integrity program for 10 years.
According to the FTC’s complaint, CPS’ loan-servicing violations include:
Misrepresenting fees consumers owed in collection calls, monthly statements, pay-off notices, and bankruptcy filings;
Making unsubstantiated claims about the amounts consumers owed;
Improperly assessing and collecting fees or other amounts;
Unilaterally modifying contracts by, for example, increasing principal balances;
Failing to disclose financial effects of loan extensions;
Misrepresenting that consumers must use particular payment methods requiring service fees; and
Misrepresenting that the company audits verified consumer accounts balances.
The company’s collection violations include disclosing the existence of debts to third parties; calling consumers at work when not permitted or inconvenient; calling third parties repeatedly with intent to harass; making unauthorized debits from consumer bank accounts; falsely threatening car repossession; and deceptively manipulating Caller ID. Because for many of its accounts CPS is a creditor, the complaint charges these practices violated Section 5 of the FTC Act. For those accounts where CPS is a debt collector, the complaint charges these practices violated the FDCPA.
CPS is also charged with failure to establish and implement reasonable written procedures and failure to reasonably investigate and respond timely to consumer disputes under the Furnisher Rule.
Under the order, the company will begin sending refunds to consumers and adjusting affected account balances within 90 days. Consumers with questions about their elgibility for a refund or account adjustment should contact CPS directly via telephone at 1-888-806-2367, email FTCsettlement@consumerportfolio.com, or visit the company’s website.
The FTC provides information for businesses regarding debt collection and the Furnisher Rule. For consumers, the FTC has resources on credit and loans and dealing with debt.
The Commission vote to authorize the staff to refer the complaint to the Department of Justice, and to approve the proposed consent decree, was 4-0-1, with Commissioner Terrell McSweeny not participating. The DOJ filed the complaint and proposed consent decree on behalf of the Commission in the Central District of California on May 28, 2014. The proposed consent decree is subject to court approval.
NOTE: The Commission authorizes the filing of 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. Consent decrees have the force of law when signed by the District Court judge.
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.
Showing posts with label FAIR DEBT COLLECTION PRACTICES ACT. Show all posts
Showing posts with label FAIR DEBT COLLECTION PRACTICES ACT. Show all posts
Saturday, May 31, 2014
Sunday, April 6, 2014
DEBT COLLECTOR BULLY BANNED FROM DEBT COLLECTION BUSINESS
FROM: FEDERAL TRADE COMMISSION
FTC Obtains more than $3.3 Million for Consumers; Defendants Agree to be Permanently Banned from the Debt Collection Business
Scheme Often Targeted Spanish-Speaking Consumers, Defendants Posed as Process Servers and Attorneys
The two principal owners of Rincon Debt Management, Jason R. Begley and Wayne W. Lunsford, will surrender more than $3.3 million worth of assets that will be used to provide refunds to victims, under a settlement with the Federal Trade Commission. The two defendants also are permanently banned from the debt collection business.
Litigation continues against several companies that Begley and Lunsford used as part of their debt collection scheme. The Corona, California-based operation collected debts nationwide.
Part of the FTC’s continuing efforts to curb illegal debt collection practices, the settlement resolves FTC allegations that from April 2009 until October 2011 when the Court shut down the operation at the FTC’s request, Begley and Lunsford deceived and abused Spanish- and English-speaking consumers – making bogus threats that consumers had been sued or could be arrested over debts they often did not owe.
“These debt collectors focused on Spanish-speaking consumers and other people who were strapped for cash, and preyed on them by using abusive collection tactics in violation of federal law,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection.
The FTC’s complaint alleged that the defendants violated the Federal Trade Commission Act and the Fair Debt Collection Practices Act by calling consumers and their employers, family, friends, and neighbors, posing as process servers seeking to deliver legal papers that purportedly related to a lawsuit. In some instances, the defendants threatened that consumers would be arrested if they did not respond to the calls. The defendants and their employees also masqueraded as attorneys or employees of a law office – demanding that consumers pay “court costs” and “legal fees” – even though the operation did not file lawsuits against consumers, the FTC alleged. Also, in many instances, consumers did not even owe the debt the defendants were trying to collect.
In addition to the permanent ban on participating in debt relief services, Begley and Lunsford are prohibited from misrepresenting the features of any financial products or services, including lending, credit repair, debt relief, and mortgage assistance relief services.
The order imposes a $23 million judgment against the defendants, which will be suspended due to their inability to pay, except for the $3 million in frozen funds held by the receiver and the personal assets both agreed to surrender. Begley is required to surrender the rights to more than 3,500 American Eagle silver and gold coins. He will also pay a $176,115 contempt judgment for having sold his home and some other coins in violation of the asset freeze that was imposed as part of the FTC’s case. Lunsford is required to pay a $134,000 contempt judgment for the proceeds he received when he sold his home in violation of the asset freeze.
If it is determined that the financial information the defendants gave the FTC was untruthful, the full $23 million judgment would become due.
For consumer information about dealing with debt collectors, see Debt Collection.
The Commission vote approving the proposed consent judgment was 4-0. The FTC filed the proposed consent judgment in the U.S. District Court for the Central District of California and the Court approved it on March 28,
FTC Obtains more than $3.3 Million for Consumers; Defendants Agree to be Permanently Banned from the Debt Collection Business
Scheme Often Targeted Spanish-Speaking Consumers, Defendants Posed as Process Servers and Attorneys
The two principal owners of Rincon Debt Management, Jason R. Begley and Wayne W. Lunsford, will surrender more than $3.3 million worth of assets that will be used to provide refunds to victims, under a settlement with the Federal Trade Commission. The two defendants also are permanently banned from the debt collection business.
Litigation continues against several companies that Begley and Lunsford used as part of their debt collection scheme. The Corona, California-based operation collected debts nationwide.
Part of the FTC’s continuing efforts to curb illegal debt collection practices, the settlement resolves FTC allegations that from April 2009 until October 2011 when the Court shut down the operation at the FTC’s request, Begley and Lunsford deceived and abused Spanish- and English-speaking consumers – making bogus threats that consumers had been sued or could be arrested over debts they often did not owe.
“These debt collectors focused on Spanish-speaking consumers and other people who were strapped for cash, and preyed on them by using abusive collection tactics in violation of federal law,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection.
The FTC’s complaint alleged that the defendants violated the Federal Trade Commission Act and the Fair Debt Collection Practices Act by calling consumers and their employers, family, friends, and neighbors, posing as process servers seeking to deliver legal papers that purportedly related to a lawsuit. In some instances, the defendants threatened that consumers would be arrested if they did not respond to the calls. The defendants and their employees also masqueraded as attorneys or employees of a law office – demanding that consumers pay “court costs” and “legal fees” – even though the operation did not file lawsuits against consumers, the FTC alleged. Also, in many instances, consumers did not even owe the debt the defendants were trying to collect.
In addition to the permanent ban on participating in debt relief services, Begley and Lunsford are prohibited from misrepresenting the features of any financial products or services, including lending, credit repair, debt relief, and mortgage assistance relief services.
The order imposes a $23 million judgment against the defendants, which will be suspended due to their inability to pay, except for the $3 million in frozen funds held by the receiver and the personal assets both agreed to surrender. Begley is required to surrender the rights to more than 3,500 American Eagle silver and gold coins. He will also pay a $176,115 contempt judgment for having sold his home and some other coins in violation of the asset freeze that was imposed as part of the FTC’s case. Lunsford is required to pay a $134,000 contempt judgment for the proceeds he received when he sold his home in violation of the asset freeze.
If it is determined that the financial information the defendants gave the FTC was untruthful, the full $23 million judgment would become due.
For consumer information about dealing with debt collectors, see Debt Collection.
The Commission vote approving the proposed consent judgment was 4-0. The FTC filed the proposed consent judgment in the U.S. District Court for the Central District of California and the Court approved it on March 28,
Saturday, August 3, 2013
FTC ANNOUNCES COURT ORDER HALTING DEBT COLLECTORS ILLEGAL PRACTICES
FROM: FEDERAL TRADE COMMISSION
At FTC's Request, Court Orders Halt to Debt Collector's Illegal Practices, Freezes Assets
Defendants Allegedly Broke the Law by Posing as Process Servers, Threatening Lawsuits, and Contacting Consumers’ Employers and Family Members in Violation of Their Privacy.
At the request of the Federal Trade Commission, a U.S. district court has halted a debt collection operation that allegedly extorted payments from consumers by using false threats of lawsuits and calculated campaigns to embarrass consumers by unlawfully communicating with family members, friends, and coworkers. The court order stops the illegal conduct, freezes the operation’s assets, and appoints a temporary receiver to take over the defendants’ business while the FTC moves forward with the case.
The lawsuit, part of the FTC’s continuing crackdown on scams that target consumers in financial distress, charged four individuals and seven companies. The FTC alleged that the defendants were part of an elaborate debt collection scheme operating from locations in Orange and Riverside counties in California, and that they used various business names including Western Performance Group, as well as fictitious names, which they changed frequently to avoid law enforcement scrutiny.
The FTC alleged that the defendants called consumers and their employers, colleagues, and family members posing as process servers or law office employees, and claimed they were seeking to deliver legal papers that purportedly related to a lawsuit. In some instances, the defendants threatened that consumers would be arrested if they did not respond to the calls. But the debt collectors were not process servers or law office employees, and the defendants did not file lawsuits against the consumers. The FTC charged that the defendants’ false and misleading claims violated the FTC Act and the Fair Debt Collection Practices Act. In addition, the FTC alleged that the defendants violated the Fair Debt Collection Practices Act by:
improperly contacting third parties about consumers’ debts; failing to disclose the name of the company they represented, or the fact that they were attempting to collect a debt, during telephone calls to consumers; and failing to notify consumers of their right to dispute and obtain verification of their debts.
The complaint names as defendantsThai Han; Jim Tran Phelps; Keith Hua; James Novella; One FC, LLC, also doing business as Western Performance Group and WPG; Credit MP, LLC, also doing business as AFGA, CMP, AFG & Associates, AF Group, Allied Financial Group, and Allied Guarantee Financial; Western Capital Group, Inc., also doing business as ERA, LMR, WCG, and WC Group; SJ Capitol LLC, also doing business as SCG; Green Fidelity Allegiance, Inc., also doing business as WRA; Asset and Capital Management Group; and Crown Funding Company, LLC.
The Commission vote authorizing the staff to file the complaint was 4-0. The FTC filed the complaint and the request for a temporary restraining order in the U.S. District Court for the Central District of California. On July 24, 2013, the court granted the FTC’s request for a temporary restraining order. The Federal Trade Commission would like to thank the U.S. Postal Inspection Service for its assistance in bringing this case.
At FTC's Request, Court Orders Halt to Debt Collector's Illegal Practices, Freezes Assets
Defendants Allegedly Broke the Law by Posing as Process Servers, Threatening Lawsuits, and Contacting Consumers’ Employers and Family Members in Violation of Their Privacy.
At the request of the Federal Trade Commission, a U.S. district court has halted a debt collection operation that allegedly extorted payments from consumers by using false threats of lawsuits and calculated campaigns to embarrass consumers by unlawfully communicating with family members, friends, and coworkers. The court order stops the illegal conduct, freezes the operation’s assets, and appoints a temporary receiver to take over the defendants’ business while the FTC moves forward with the case.
The lawsuit, part of the FTC’s continuing crackdown on scams that target consumers in financial distress, charged four individuals and seven companies. The FTC alleged that the defendants were part of an elaborate debt collection scheme operating from locations in Orange and Riverside counties in California, and that they used various business names including Western Performance Group, as well as fictitious names, which they changed frequently to avoid law enforcement scrutiny.
The FTC alleged that the defendants called consumers and their employers, colleagues, and family members posing as process servers or law office employees, and claimed they were seeking to deliver legal papers that purportedly related to a lawsuit. In some instances, the defendants threatened that consumers would be arrested if they did not respond to the calls. But the debt collectors were not process servers or law office employees, and the defendants did not file lawsuits against the consumers. The FTC charged that the defendants’ false and misleading claims violated the FTC Act and the Fair Debt Collection Practices Act. In addition, the FTC alleged that the defendants violated the Fair Debt Collection Practices Act by:
improperly contacting third parties about consumers’ debts; failing to disclose the name of the company they represented, or the fact that they were attempting to collect a debt, during telephone calls to consumers; and failing to notify consumers of their right to dispute and obtain verification of their debts.
The complaint names as defendantsThai Han; Jim Tran Phelps; Keith Hua; James Novella; One FC, LLC, also doing business as Western Performance Group and WPG; Credit MP, LLC, also doing business as AFGA, CMP, AFG & Associates, AF Group, Allied Financial Group, and Allied Guarantee Financial; Western Capital Group, Inc., also doing business as ERA, LMR, WCG, and WC Group; SJ Capitol LLC, also doing business as SCG; Green Fidelity Allegiance, Inc., also doing business as WRA; Asset and Capital Management Group; and Crown Funding Company, LLC.
The Commission vote authorizing the staff to file the complaint was 4-0. The FTC filed the complaint and the request for a temporary restraining order in the U.S. District Court for the Central District of California. On July 24, 2013, the court granted the FTC’s request for a temporary restraining order. The Federal Trade Commission would like to thank the U.S. Postal Inspection Service for its assistance in bringing this case.
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