The Federal Trade Commission and the New York Attorney General’s Office filed a joint complaint against a New York based debt collector that goes by several names, including National Check Registry.  As a result of the complaint, the U.S. District Court for the Western District of New York froze the operation’s assets and appointed a temporary receiver to take over the business pending trial (opinion found here).

In the joint complaint, the FTC and the Attorney General alleged that the operation used fraudulent tactics against consumers in violation of the Federal Trade Commission Act, the Fair Debt Collection Practices Act, and various New York state laws.  The allegations included that the defendants misrepresented that consumers had committed check fraud or another criminal act, threatened to arrest consumers, threatened to garnish consumers’ wages, failed to substantiate the alleged debts owed, charged illegal fees, and improperly revealed consumers’ debts to third parties.  As usual, the FTC also brought action against the principals responsible for committing the alleged violations – not just the debt collectors themselves.

Jessica Rich, director of the FTC’s Bureau of Consumer Protection, stated, “[t]hese debt collectors continued to harass consumers and violate the law after the validity of the debt was called into question, and after the New York Attorney General’s office ordered them to stop.  …  By working together with our state partners, we can leverage our resources to stop these illegal tactics.”

The FTC has publically stated that it intends to focus its efforts on debt collectors using fraudulent or intimidating practices.  The successful effort to freeze the debt collector’s assets and appointment of a receiver in a suit challenging a debt collector’s tactics reflects the seriousness with which the FTC is pursuing its crackdown.