On August 21, the Federal Trade Commission charged a North Carolina debt collection operation with using deception and intimidation to collect money from consumers for debts they did not owe or that the group had no right to collect. On August 24, the District Court for the Western District of North Carolina granted a temporary restraining order (“TRO”) and froze the defendants’ assets pending trial.
The defendants – Dion Barron, Charles R. Montgomery III, and Lombardo, Daniels & Moss LLC – are charged with violating the Federal Trade Commission Act (“FTC Act”) and the Fair Debt Collection Practices Act (“FDCPA”).
The FTC’s complaint accuses the defendants of using trade names resembling law firms to deceive consumers into thinking the debts were legitimate. Consumers were told that they were delinquent on payday loans and other debts, and were threatened with arrest or other legal action, such as a lawsuit or wage garnishment, if they did not pay. As part of the scheme to convince consumers of the legitimacy of the operations, the defendants possessed, or claimed to possess, consumers’ Social Security numbers, bank account information, or relatives’ names or contact information. The defendants were allegedly able to collect more than $2.1 million from their victims before the scheme was uncovered.
In addition to using abusive and deceptive practices to collect purported debt, the defendants are also accused of failing to comply with other debt collection regulations, including the failure to disclose the nature of their communications (that they were debt collectors calling to collect a debt and that any information provided by consumers could be used for that purpose). Consumers also were not provided with written notice of their alleged debt or with an opportunity to dispute the debt.
In granting the TRO, the Court held that “[t]here is good cause to believe that immediate and irreparable harm will result from Defendants’ ongoing violations” of the FTC Act and FDCPA “unless Defendants are immediately restrained and enjoined.”