FTC and New York AG Team Up in Actions Against Two Buffalo Debt Collection Scams

The Federal Trade Commission, jointly with the New York State Office of the Attorney General, has filed lawsuits aimed at shutting down two particularly egregious and abusive debt collection operations centered in Buffalo, N.Y. that target consumers nationwide. According to the complaints, the separate enterprises used threats and abusive language, including false threats that consumers would be arrested, to collect more than $45 million in supposed debts.

“The Federal Trade Commission is pleased to work with the New York State Attorney General to stop abusive debt collectors,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “The cases announced today will help protect consumers from debt collectors that disregard the law in an attempt to make a buck.”

“Today’s action should make it clear that nobody is above the law, and when shady debt collectors engage in illegal and abusive business practices, they will be held accountable,” said Attorney General Schneiderman. “The use of threats, including the threat of arrest, to collect debts is unconscionable, and I am pleased to partner with the FTC to stand up for consumers against these bad actors.”

The federal court has temporarily halted defendants’ practices in both cases at the FTC’s and New York Attorney General’s request.

4 Star Resolution LLC

On February 9, 2015, the FTC and New York Attorney General’s Office filed a complaint against 4 Star Resolution LLC, six other corporate entities, and three individuals (collectively, 4 Star), alleging that 4 Star used abusive and deceptive tactics to pressure consumers into making payments on supposed debts.

According to the complaint, 4 Star regularly called consumers using fictitious addresses, bogus company names, and spoofed phone numbers. After misrepresenting their names and locations, 4 Star’s collectors falsely identified themselves to consumers, claiming that they were attorneys, process servers, government agents, or criminal law enforcement officials.

In addition, 4 Star’s collectors allegedly falsely claimed that the consumers had committed an illegal or criminal act such as bank or check fraud. 4 Star’s collectors then falsely threatened consumers with dire consequences, including arrest, imprisonment, and civil lawsuits, unless the consumers made an immediate payment on the supposed debts.

The complaint cites several examples that illustrate the defendants’ alleged abusive and deceptive conduct. During one call to collect on a supposed debt, a 4 Star collector used the pseudonym “Detective Jeff Ramsay,” and left a message where he falsely asserted that he was seeking to serve a bench warrant on the consumer for check fraud.

In another instance, 4 Star’s collectors falsely told a consumer that her husband had committed check and money fraud and that legal action would be taken against the husband if the debt was not paid in two days. One of 4 Star’s collectors falsely identified himself to the consumer as “Investigator Kearns” and claimed that he worked for a government agency located in Washington, DC.

The complaint also alleges that when consumers asked for proof of the supposed debt, 4 Star’s representatives refused to provide it, and instead often told consumers they would only receive proof in court or after the debt was paid. The defendants often allegedly failed to provide written notice of the debt as required by law and failed to make required disclosures to consumers.

Finally, the complaint alleges that 4 Star unlawfully disclosed information about supposed debtors to third parties, including friends, family members, and employers, and illegally used abusive and profane language, including routinely calling consumers such names as “idiot,” “dummy,” “piece of scum,” “thief,” or “loser.”

The 4 Star defendants are: 1) 4 Star Resolution LLC; 2) Profile Management, Inc.; 3) International Recovery Service LLC; 4) Check Solutions Services Inc.; 5) Check Fraud Service LLC; 6) Merchant Recovery Service, Inc.; 7) Fourstar Revenue Management LLC; 8) Travell Thomas, individually and as a principal, manager, and/or officer of several of the corporate defendants; 9) Maurice Sessum, individually and as a principal, manager, and/or officer of several of the corporate defendants; and 10) Charles Blakely III, individually and as principal, manager, and/or officer of Merchant Recovery Service, Inc. The complaint also alleges that the corporate defendants conducted business through approximately two dozen fictitious names.

Vantage Point Services, LLC

According to the second complaint, filed against Vantage Point Services, LLC, and related corporate and individual defendants, the organization, used deceptive, unfair, and abusive tactics to pressure consumers into making payments on supposed debts.

The complaint alleges that in collection calls to consumers the defendants often falsely claimed to be a law firm, process server, unrelated debt collection company, or entity affiliated with the government. In some instances, the defendants even posed as government agents, including FBI agents and district attorneys. In others instances, the defendants falsely told consumers they were working as an intermediary with the state, or that the state had placed the consumers’ account with them to give them a chance to pay the debt before criminal charges were filed.

With this deceptive backdrop, the defendants falsely claimed that consumers had committed a crime and that an arrest warrant would be issued unless they made a payment. Often, the defendants told consumers that they would spend 90 or 120 days in jail, or that that would need to pay thousands of dollars in bail if they didn’t pay.

The defendants’ conduct was not limited to people that supposedly owed the debt, however. Vantage Point made similar representations to third parties, including supposed debtors’ friends, family members, and co-workers. In some cases, the defendants falsely told third parties that the supposed debtors had committed a crime and that a warrant had been issued for their arrest.

Finally, the complaint states that the defendants failed to provide consumers with basic information about their identity during calls, did not provided consumers with information about the supposed debt within five days of the call, as required by the Fair Debt Collection Practices Act (FDCPA), and illegally charged them a “processing fee.”

The Vantage defendants are: 1) Vantage Point Services, LLC; 2) Payment Management Solutions, Inc.; and 3) Gregory MacKinnon; 4) Megan Vandeviver; and 5) Angela Burdorf, each individually and as an officer of one or more of the corporate defendants.

Both complaints charge the respective defendants with violating the FTC Act and the FDCPA, as well as several New York State laws prohibiting deceptive acts and practices. In filing the complaints, the FTC and the New York Attorney General’s Office are seeking to permanently stop the defendants’ illegal conduct and to obtain money to provide refunds to consumers.