We like solving puzzles – from crosswords and anagrams to that byzantine conspiracy wall constructed by Claire Danes' character on "Homeland." So it doesn't faze FTC staff when companies use complicated corporate structures to hide what they're up to. Those skills came in handy in unraveling how debt collector Asset & Capital Management Group and its host of related businesses were violating Section 5 of the FTC Act and the Fair Debt Collection Practices Act. The prize for untangling this puzzle: judgments with more than $4 million in consumer redress and lifetime bans on collecting debts.
California-based Asset & Capital Management Group was a third-party debt collector that bought portfolios of past-due consumer credit card debt. Through dozens of businesses and a web of U.S. and foreign shell companies, the defendants created a sprawling organization the FTC says subjected consumers to an illegal onslaught of intimidation.
One interesting idiosyncrasy: The defendants had a practice of setting up companies with three- or four-letter names – for example, PFG, WRA, SCG, ERA, LMR, AFGA, CMP, and WPG. Once an entity had been hauled into court for violations of the law or had earned notoriety for egregious practices, the defendants, in effect, shook the Boggle cube to rename the outfit and continue the campaign of harassment. Among the tools in their dubious arsenal: improperly calling family, friends, and co-workers about a person's debts; impersonating process servers or law firm employees; and falsely threating arrest, wage garnishment, or seizure of property.
The complaint named four individuals and seven corporations. Last year, at the FTC's request, a federal court in California halted the defendants' activities and appointed a Receiver to take over while the lawsuit proceeded. The settlements just announced by the FTC impose judgments of more than $90 million, which will be partially suspended when certain defendants turn over their personal assets. The proceeds from those assets, combined with corporate assets held by the Receiver, total more than $4 million. Besides the monetary remedies, the judgments ban the defendants for life from debt collection.
What should other debt collectors take from the settlement? If you're violating the law, here's the answer to (Section) 5 Down: S-T-O-P.