FTC busts “phantom debt” collection scheme

How some investment firms target the poor

The Federal Trade Commission said Friday it has filed a lawsuit against 10 New York and North Carolina companies and six individuals for allegedly defrauding consumers out of millions of dollars by collecting money they didn’t owe. 

The agency ordered a federal court in North Carolina to temporarily freeze the assets of the Global Asset Financial Services Group, which the FTC claims ran a so-called “phantom debt” scheme in which employees masqueraded as attorneys or legal assistants to coerce consumers into paying up. Regulators said consumers lost more than $4 million.

The companies and individuals named as defendants in the FTC suit:

  • GAFS Group
  • Regional Asset Maintenance
  • 10D Holdings Inc.
  • Trans America Consumer Solutions
  • Midwestern Alliance 
  • LLI Business Innovations 
  • TACS I 
  • Cedar Rose Holdings & Development Inc.
  • Their principals: Ankh Ali, Aziza Ali, Kenneth Moody, David Carr, Jeremy Scinta, Omar Hussain

Along with pretending to be lawyers, the debt collectors often called a customer’s family and friends, and also used abusive and threatening language to intimidate people, the FTC said. To extract payment, they allegedly claimed that refusing to pay debts would result in arrests or criminal prosecution.

The FTC said it issued numerous warnings to the defendants, who are based in Buffalo, New York, and Charlotte, North Caroline, but that they continued to engage in illegal actions.

How to rebuild your credit

Under the Fair Debt Collection Practices Act, debt collectors are prohibited from using abusive language or even to contact anyone other than the debtor to collect payment. Consumers also have the right to demand that collectors validate a debt in writing, so they can check the amounts against their own credit reports, (available free of charge at www.annualcreditreport.com).

Any debt collector who violates these rules can also be reported to the state attorney general’s consumer affairs division or to the FTC.

Categories: Business

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