Debt collectors tricked consumers into paying over $7.6 million for non-existent debts, using threats of imprisonment and harassment.
At a Glance
- FTC files lawsuit against Global Circulation, Inc. for collecting bogus debt
- Company accused of using illegal tactics, including threats of jail time
- Federal court halts GCI’s operations and freezes assets
- FTC refunded $4.86 million to victims of abusive debt collectors in 2021
- Consumers urged to verify debts and report abusive collection practices
FTC Cracks Down on Deceptive Debt Collection
The Federal Trade Commission (FTC) has launched a legal assault against Global Circulation, Inc. (GCI) and its owner, Kenneth Redon III, for allegedly duping consumers into paying millions for non-existent debts. This action is part of the FTC’s ongoing efforts to protect consumers from predatory debt collection practices that have plagued hardworking Americans for years.
FTC takes action against phantom debt collector that collected millions in bogus debt from consumers. Federal court temporarily halts operations while lawsuit proceeds: https://t.co/rC3z6ML10O
— FTC (@FTC) November 4, 2024
According to the FTC’s complaint, GCI employed a range of illegal tactics to extort money from unsuspecting victims. These included threats of imprisonment and harassment of family members – tactics that are explicitly forbidden under federal law. The company’s aggressive approach managed to extract over $7.6 million from consumers for debts that were either non-existent or not legally collectible.
Swift Action and Severe Consequences
In response to these egregious violations, a federal court has taken decisive action. GCI’s operations have been temporarily halted, and the company’s assets have been frozen. Additionally, a court-appointed receiver has been tasked with managing the company’s affairs during the ongoing litigation. This swift response demonstrates the seriousness with which the FTC and the courts view such blatant disregard for consumer rights.
“Debt collectors should know that harassing families and making empty threats of jail time is illegal” – Samuel Levine
The FTC’s aggressive stance against abusive debt collection practices is not new. In 2014 alone, the agency filed 10 new debt collection cases against 56 defendants, the highest number in a single year. These efforts resulted in nearly $140 million in judgments against abusive debt collectors, including a record $90.5 million judgment.
Protecting Consumers and Educating the Public
The FTC’s work extends beyond legal action. The agency has been actively engaged in educating consumers about their rights and businesses about their responsibilities under the Fair Debt Collection Practices Act (FDCPA) and FTC Act. In 2014, the FTC distributed 14.8 million printed publications on debt collection, demonstrating its commitment to public awareness.
The FTC has been particularly focused on combating “phantom debt collection,” a practice where collectors attempt to recover debts that don’t exist or aren’t owed. This insidious tactic preys on vulnerable consumers, often using fear and intimidation to extract payments. The agency’s efforts have led to the shutdown of more than 20 debt collection companies and the collection of $16.5 million from judgments.
Challenges and Future Direction
Despite these successes, the FTC faces challenges in its fight against abusive debt collection practices. A Supreme Court decision in AMG Capital Management v. FTC has made it more difficult for the agency to obtain monetary relief in certain cases. In response, the FTC has requested that Congress amend the FTC Act to restore its ability to secure monetary relief in cases outside the FDCPA.
“This action should send a clear message that illegal collection practices will come with heavy consequences.” – Samuel Levine
As the FTC continues its battle against deceptive and abusive debt collection practices, consumers are urged to remain vigilant. If contacted by a debt collector, individuals should request “validation information” to confirm the debt’s legitimacy. If the debt is unrecognized, consumers have the right to dispute it within 30 days, which halts collection efforts until verification is provided. By staying informed and reporting abusive practices, consumers can play a crucial role in combating this pervasive problem.
