FTC Shuts Down Texas Debt Collector Who Threatened To Arrest Consumers

Debt collection is a generally unsavory operation. Thankfully, there’s now one less scummy, lying collector calling consumers. A Houston-based company is out of business and must pay $1.4 million after being charged with unsavory practices.

Under a settlement with the FTC, the operators of Goldman Schwartz, Inc., are permanently banned from debt collection and company owner Gerald Wright must surrender all assets, valued at $550,000, to pay restitution to consumers who were charged unauthorized late and attorney fees. The remainder of the $1.4 million judgement is suspended based on inability to pay.

The company, which primarily collected on payday loans nationwide, was shut down by a U.S. district court in 2013 after the FTC found the company has partaken in shady collection tactics including telling a Virginia woman that she would be arrested and jailed for three years, and would lose her disability payments if she did not pay a $980 debt.

According to the complaint [PDF], the company allegedly made false threats that consumers would be arrested and jailed, and that their children would be taken into custody; falsely claimed to be attorneys or to work hand-in-hand with local sheriff’s offices; disclosed debts to consumers’ employers and military superiors; and collected bogus late fees and attorneys’ fees.

Among the many practices prohibited by the Fair Debt Collection Practices Act, collections agencies are not allowed to threaten arrest, use obscene language, or pretend they represent law enforcement.

The defendants allegedly harassed and abused consumers by using obscene language and by calling repeatedly and at odd hours early in the morning or late in the evening. The collectors also failed to inform consumers of their rights to dispute the debts, have the debts verified, and obtain the names of the original creditors.

The company, which did business under the names Goldman, Schwartz, Lieberman & Stein, Debtcom, Inc., Cole, Tanner, & Wright, Harris County Check Recovery Inc., The G. Wright Group Inc., and The Wright Group, has been dissolved.

FTC Puts Texas-based Operation Permanently Out of the Debt Collection Business After It Allegedly Used Deception, Insults, and False Threats against Consumers [Federal Trade Commission]