On October 23, the Federal Trade Commission and the New York Attorney General sued multiple New York debt collection companies for using false and deceptive tactics to collect on debts.  On October 26, the United States District Court for the Western District of New York granted a temporary restraining order (“TRO”) prohibiting the defendants from taking a multitude of actions while attempting to collect debts from consumers.

The defendants – Campbell Capital LLC; Kahl, Heidenreich, and Nemmer LLC; Urban, Heidenreich, Melendez, and Associates, LLC; J&V Receivables LLC; Rich Financial LLC; BCH & Associates Ltd.; and Robert Heidenreich (individually and as principal and owner of the aforementioned companies) – are charged with violating the Federal Trade Commission Act (“FTC Act”) and the Fair Debt Collection Practices Act (“FDCPA”).

The complaint accuses the defendants of using various deceptive tactics when interacting with consumers to collect on alleged debts, including using fictitious business names.  The complaint also alleges that defendants’ employees would pose as law enforcement officers when placing calls and tell consumers that to avoid arrest or criminal liability the consumer needed to take specific actions regarding their debt.  In other calls, defendants’ employees would falsely claim a civil suit had been filed against the consumer or would be filed if the consumer did not pay.  The defendants are also accused of “overbiffing”—demanding more than a consumers’ balance in full.

In addition to the above tactics, defendants are also accused of unlawfully disclosing consumers’ debts to third parties such as employers and family members, as well as using profane and abusive language.

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, FDCPA, and New York state law “unless Defendants are restrained and enjoined by order of this Court.”  The Court also determined that good cause exists for “appointing a temporary receiver . . . freezing the Defendants’ assets, permitting the Plaintiffs and the Receiver immediate access to the Defendants’ business premises, and permitting the Plaintiffs and the Receiver to take expedited discovery.”

This is another example of federal and state regulators working together in the debt collection space to stop egregious conduct of bad actors. Like similar enforcement actions, the defendants include the individual alleged to be the principal and owner of the companies accused of deceptively communicating with consumers.