FTC Halts Debt Collection Company That Allegedly Used Illegal Tactics To Collect $8.7M

And another one bites the dust – kind of. The Federal Trade Commission, along with the New York Attorney General’s office, received an order to temporarily halt a Buffalo-based debt collection operation that allegedly used lies and threats to collect more than $8.7 million from consumers.

The FTC announced Monday that a U.S. district court halted the operation, froze its assets and appointed a temporary received to take over the business pending trial.

According to the FTC and AG’s complaint, the defendants misrepresented that consumers had committed check fraud or another criminal act; falsely threatened to arrest or imprison consumers, sue them, garnish their wages, or put a lien on their property; failed to back up their claims that consumers owed the debt; charged illegal fees; and improperly revealed consumers’ debts to third parties.

The operation, controlled by Joseph C. Bella, III, Diane Bella, Luis A. Shaw, was known by several names including National Check Registry.

The operators are charged with allegedly changing the company’s name to eCapital Service, LLC in order to evade detection and continue illegal behavior after signing an agreement with New York State authorities in 2013 that banned it from violating federal and state collection laws.

Since February 2010, the defendants allegedly collected at least $8.7 million in payments for purported debts while violating the Federal Trade Commission Act, the Fair Debt Collection Act and numerous New York state laws.

According to the complaint, the defendants allegedly:

  • told one consumer in Washington State that they would have the “Washington County Police” issue a warrant for her arrest, and another serving in the military that they would bring an action against him under the Uniform Code of Military Justice;
  • said the only way to avoid arrest, imprisonment, lawsuits, wage garnishments, and seized assets would be to make an immediate payment over the phone;
  • continued to accuse consumers of check fraud and other crimes even after they produced evidence showing they didn’t owe the debt in question;
  • contacted friends, family members, and co-workers of consumers whom they claimed owed a debt, and in some cases, not only revealed the supposed debt but also said the consumers had committed check fraud, and would be arrested or imprisoned if the debt was not paid;
  • added an illegal $8 “processing fee” when consumers made payments on supposed debts over the phone;
  • failed to provide consumers with debt collection notices and disclosures that are required under state and federal law, making it difficult for consumers to determine whether they owed the debt, and how they could dispute its validity; and
  • continued trying to collect a debt from a consumer who had discharged the debt in bankruptcy.

Court Halts Debt Collector’s Operations, Freezes Assets [Federal Trade Commission]