On March 22nd, the Federal Trade Commission (FTC) and New York Attorney General Eric Shneiderman (D) announced final orders to permanently ban debt collectors 4 Star Resolution, LLC [also known as Four Star Resolution LLC], along with six affiliated companies, and three individual defendants from the debt collection industry.The FTC and NY AG allege that these agencies routinely put pressure on individuals to make payments on dubious debts. Evidently, the deceptive tactics they employed included threats of lawsuits, arrest, imprisonment, or garnishment of wages.The defendants supposedly claimed or implied that they were acting on behalf of a law enforcement entity or court and would frequently impersonate attorneys or investigators.This is not uncommon in the realm of debt collection; a class action filing by Nicole J. of New York, on behalf of area residents, revolves around the practice of sending collection letters that violate the Federal Debt Collections Practices Act (FDCPA) by using language that can easily be misread or misinterpreted.The suit alleges that Client Services, Inc. sent an “unfair and unconscionable” letter for a tuition balance that failed to disclose whether the balance owed would increase due to the accrual of interest or fees. According to the suit, this lack of disclosure could lead the least sophisticated consumer to wrongly believe he or she paid the debt in full when, in reality, the debt was continually accruing interest.The FDCPA was first enacted in 1977 to restrict abusive activity by debt collectors and it remains an important legal statute to this day. Alas, laws like the FDCPA and the Truth in Lending Act (TILA) are often circumvented by shady companies.Companies like Client Services, Inc. have been sued for collection abuse in the past because they used shrewd methods to obtain payment. This includes persistent late-night phone calls, false assertions that they are representing a legal entity, or impersonation of process servers.In the case of Four Star Resolution, LLC and Vantage Point Services, LLC, both organizations failed to demonstrate proof of the debt and shared information about the debt with the consumers' family members, friends and employers. All of these are illegal activities that are punishable by law.The provisions of the FDCPA include all of the following:

• Collectors cannot call before 8:00 am or after 9:00 pm unless you have authorized them to do so.

• Collectors have to cease contacting debtors if/when requested to do so in writing.

• Collectors cannot contact debtors when they're at work if they have been told, either over the phone or in writing, to stop or if the debtor is not permitted to receive phone calls at work.

• Consumers can request debt validation which means that they can challenge a debt and/or receive written verification of a debt from the debt collector. Once you've received proof of the debt, the debt collector has to cease contact until the debtor complies.

• Collectors cannot lie or use deception to collect a debt.

• Collectors may not threaten legal action they are not really contemplating.

• Collectors must identify themselves as debt collectors in every communication with the consumer.

• Collectors have to inform the consumer that they can dispute the debt.

For more on the law, consumers can visit this page, which offers the full text.4 Star Resolution, LLC and its affiliates were clearly in violation of these provisions and they are going to pay for it. The orders against them impose a $30 million judgment that will be partially suspended upon the surrender of specific assets. Additionally, an order against Charles Blakely III and Merchant Recovery Service, Inc. imposes an $18,789,000 judgment that will be partially suspended upon the surrender of certain assets.Perhaps most importantly, these entities have been banned from buying or selling debts as part of their settlements with the FTC and AG Schneiderman.

New York AG Eric Schneiderman; image by Kelly Campbell www.kellycampbellphoto.com, The Office of Jerry Nadler, CC BY 2.0, via Wikimedia Commons, no changes.

For those who are dealing with debt, there are several steps that one can take to avoid being targeted by similarly malicious and criminal debt collection operations. First, when approached about a supposed debt, never confirm nor deny that the debt is yours. Always start by requesting debt validation.With nearly 4 billion Internet users the world over, it's safe to say that most people will receive scam emails from bogus companies or cybercriminals. If you receive an email about a debt from a company whose name you do not recognize, do not open it.Any legitimate collector seeking payment on an outstanding debt will send a paper letter to your mailing address.If you have a legitimate debt, your debt validation letter should tell you how much you owe, who you owe, and a statement giving you 30 days to dispute the debt. It will also include a statement that, if you dispute the debt within the 30-day window, the collector will mail you the verification of the debt or a copy of the judgment against you, as well as a statement that the collector will provide the name and address of the original creditor (if different from the collector) as long as you send a request for it within the 30-day window.In some cases, debt validation can be a bad idea; if you know for a fact that the debt collector and the debt itself are legit, sending this form can single you out among the countless individuals from whom they are looking to collect. This can lead to them taking an antagonistic approach to your case with them amassing more information on you than they initially had.If you make yourself a target of such a collector, you increase the likelihood of them filing a lawsuit against you. This could also give them an advantage when it comes to negotiating the settlement of the debt.It is always on the debtor to do their due diligence. Consumers should research any company that is approaching them about debt collection or consolidation. There are also firms like Lexington Law that specialize in assisting consumers in repairing their bad credit.Legal representation is one thing that will scare off a questionable debt collection company. Under the FDCPA, debt collectors must communicate with your lawyer once you have obtained legal counsel. Many companies will shy away from doing so if they determine the debt to be inconsequential.No matter what you do, always remember to do your homework. After all, thieves come in all shapes and sizes, and some of them wear suits.

Sources:

FTC & NY shut down abusive debt collectors, Part 2AAA Credit Guide Lexington Law Firm ReviewDebt validation