Attorney general targets scams

State joins federal effort to rein in debt collectors

State Attorney General Letitia James on Tuesday detailed her office’s efforts to protect consumers from phantom debt collectors and abusive and threatening debt-collection practices.

James’ office is part of a nationwide crackdown, led by the Federal Trade Commission, that has brought more than 50 enforcement actions in 16 states. The FTC outlined Operation Corrupt Collector in a conference call with James with reporters.

In New York, James’ office has recently been involved in five cases against debt collection companies. James said the cases are focused on protecting seniors and society’s most vulnerable. Every debt collection scam unearthed, she said, prevents a “number of victims of harassment and intimidation.”

Two of the cases are ongoing, including a scheme in Buffalo allegedly led by a man named Kenneth Thomas and others, which used “extremely deceptive and abusive tactics to collect debts.”

For instance, using a call-spoofing service, Thomas’ company allegedly disguised their phone numbers with contact information associated with the consumer’s local county courthouse or sheriff ’s office. While impersonating government officials, the debt collectors allegedly threatened consumers with pickup orders, bench warrants, license suspensions and other actions. The company, which has used the name Midway Resolution Services and others, also allegedly made threats to consumers’ friends, family members and employers.

In mid-september, a temporary restraining order was granted by state Supreme Court Justice Catherine Panepinto in Erie County enjoining the company from engaging in debt collection and freezing corporate bank accounts.

Another recent case from James’ office targeted a company that was trying to collect fake debts from consumers, which resulted in a permanent industry ban for company leadership. Another, targeting a company that charged consumers more than they owed and posed as law enforcement personnel, resulted in a $1.7 million suspended judgment, James said.

The broader federal crackdown announced Tuesday included two new FTC cases alleging that companies were trying to collect debts they cannot legally collect or that a consumer does not owe, a practice known as phantom debt collection.

States reporting actions as part of the operation are Arizona, California, Colorado, Connecticut, Florida, Idaho, Illinois, Indiana, Massachusetts, New Mexico, North Carolina, North Dakota, New York, Ohio, South Carolina and Washington.