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FTC Orders a Stop to Collection of Phantom Payday Loans

Collection of phantom payday loans is recently becoming more of a common practice for collectors and the Federal Trade Commission ("FTC") has investigated the scam and put a stop to a group of fictitious collection agencies this past week.  Debt collectors are hounding thousands of consumers nationwide for payday loan debts they don't actually owe. 

The FTC focused on the scam which appears to target consumers who applied for payday loans over the internet regardless of whether or not they took out a loan.  The FTC announced a lengthy list of collection agencies they ordered to shut their doors, cease all communication with consumer debtors and pay hefty fines for their blatant violations of the Fair Debt Collection Practices Act ("FDCPA").  A list of these fictitious agencies based mostly in Georgia and Ohio include Pinnacle Payment Services LLC, Velocity Payment Solutions LLC, Heritage Capital Services LLC, Performance Payment Processing LLC, Credit Source Plus LLC, Credit Source Plus LLC, Reliable Resolution LLC, Premium Express Processing LLC, and Premium Express Processing, LLC.

In response to almost 3,000 complaints received from consumers, the FTC launched a formal investigation.  Based on their findings, the FTC filed a formal complaint alleging that these collection agencies operated under fictitious business names that led debtors to believe they were affiliated with a law firm or law enforcement, a clear violation of the FDCPA.  The collectors used robo-calls and voice mail messages threatening to take legal action against the debtors and threatening to arrest the debtors if payment was not received within a few days time, a process that was extremely successful and coerced fearful debtors into making payment on debts they did not in fact owe.
 
The complaint further alleged, the collectors threatened to drain debtors' bank accounts and garnish their wages.  Collectors threatened to file felony charges against debtors for refusal to pay and to arrest debtors at their place of employment and to drag them into legal proceedings that would be costly and located far from their homes, all actions which of course are in violation of the FDCPA.

Taking advantage of thousands of unsuspecting consumers is exactly the reason the FTC and Consumer Financial Protection Bureau have targeted their efforts on stopping collection agencies from violating the law.  If you have been the victim of a scam debt collector and need the advice and assistance of counsel, contact SmithMarco P.C. for a free case review.

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