Regulators crack down on debt-collector aggression

NEW YORK — The Federal Trade Commission on Tuesday highlighted enforcement actions filed in recent months against two South Carolina debt-collection firms accused of bilking people out of a combined $17.2 million, as well as settlements with three other firms accused of using pressure tactics and other shady practices.

Ironically, the firms that agreed to financial settlements were unable to pay the full amounts.

While consumer complaints about debt collectors have dropped slightly since the start of the coronavirus pandemic in March, the commission’s consumer protection chief, Andrew Smith, anticipates that will change as collectors increasingly target people experiencing crisis-related financial hardship.

Of more than 85,000 debt-collection complaints from consumers this year, the commission said nearly half pertained to debts that didn’t exist or to abusive and threatening practices.

“Now would be about the time that this would start — that we would start to see consumer complaints associated with financial distress caused by the pandemic,” Smith said. “This might be debt collection complaints; it also might be complaints about various credit repair organizations or debt relief, mortgage relief and debt settlement.”

The commission, working with other federal agencies and authorities in 16 states, also is opening a campaign to give consumers tips on what to do when confronted with debt-collection calls. It includes a tip sheet with potential red flags, such as a collector refusing to provide the name of the company, the amount of debt or the original creditor.

New York Attorney General Letitia James, who joined a media conference call on the initiative offered frank advice to older people who are often seen as easy marks for dubious dialers.

James’ office was involved in two of the three settlements featured in the crackdown. Both companies based in the Buffalo, N.Y., area were permanently banned from the debt-collection industry under agreements reached in December and February.

One of the companies, Hylan Asset Management, was ordered to pay a $6.75 million judgment but had that slashed to $676,575 because of an inability to pay. The owner of the other company, Campbell Capital LLC, had its $1.7 million judgment slashed to $30,000.

In the two pending cases in South Carolina, filed in July, authorities have obtained temporary restraining orders halting the companies’ operations, freezing their assets, and putting them under the control of a receiver.