Yesterday the Federal Trade Commission (FTC) announced that it had obtained a court order to temporarily halt the operations and freeze the assets of two Florida businesses that posed as attorneys and pursued collection of phantom debts. The order was obtained in the case of Federal Trade Commission v. Hardco Holding Group LLC, et al. (Case No. 1701257, U.S.D.C., Middle District of Florida). 

The FTC charged the companies and two of the company officers with operating a business that posed as a debt collection operation, taking people’s money for fake debts they did not owe by posing as lawyers and falsely threatening to sue or have them arrested if they did not pay. In addition to Hardco Holding Group LLC, the complaint also names S &H Financial Group Inc, Daryl M. Hall, and Dequan M. Sicard as additional named defendants.

A copy of the complaint can be found here.

According to the FTC complaint:

The defendants’ collectors called people without identifying themselves as debt collectors, said a lawsuit or criminal action had been filed or soon would be filed against them, and gave a phony “case number” and a phone number to call. Those who responded were told the callers were attorneys or were calling from a law firm. The FTC also alleges that to coerce some people into paying the phantom debts, the defendants threatened them with prison time or claimed police would come to their house to arrest them.

The defendants allegedly also pretended to be unrelated, legitimate small businesses, which may have harmed those businesses’ reputation and caused angry consumers to call the businesses to complain about their debt collection activities.

The FTC also alleges that the defendants illegally disclosed purported debts to third parties, failed to send consumers required written notices with the debt amount and the creditor’s name, and failed to give them an opportunity to dispute the debt.

The U.S. District Court for the Middle District of Florida, Orlando Division entered a temporary restraining order  (TRO) against the defendants on July 10, 2017. 

insideARM Perspective 

The key to this story is the fifth word in our headline - FAKE.

Based on the allegations in the complaint and the TRO obtained, these companies are not legitimate ARM businesses. As one who has been in the legitimate ARM industry for my entire adult life, this story and other similar stories, makes me sick to my stomach. The activity described in the complaint is heinous. It is incredibly frustrating to see this type of activity connected to legitimate debt collection activity. Quite frankly, the FTC actions to stop these “businesses” and any potential sanctions can’t be severe enough for my taste. The continued existence and activity of fake debt collectors only makes the job of legitimate debt collections more difficult. 

In connection with yesterday’s announcement, the FTC published a new blog on their website yesterday – Fake Debt Collectors Impersonate Real Businesses. The article contained the following advice:

Fake debt collectors try many tricks to get you to pay. This advice will help you handle debt collectors’ calls:

  1. If a debt collector says you owe a debt, before you agree to pay anything ask for a validation notice that says how much money you owe. By law, they have to send you a validation notice in writing, within five days of contacting you. If they don’t, that’s a sign that you’re dealing with a fake debt collector.
  2. If a debt collector threatens you with jail time, hang up the phone. They’re violating the law and you should report them to us.
  3. If you own a small business, it might be a good idea to research online occasionally to check if anyone else is using your business’ name. And if you start receiving complaints about practices that your business is not engaged in, let us know.

insideARM also published a press release today regarding a webinar co-produced by the Consumer Relations Consortium (CRC) and Consumer Action designed for community based organizers who work directly with consumers to offer an “insider’s perspective” on how to start a dialogue with a legitimate debt collector, and how to spot a scam. It is this writer’s belief that the entire ARM industry needs to participate in efforts like this to educate consumers on how to spot debt collection scams and, if the debt is legitimate, how to work with the debt collector to resolve the debt.


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