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FTC Accuses Debt Collectors of $16M Scam

(CN) - Several New York businesses falsely threatened consumers with jail time to reap more than $16 million in fake debt payments, the Federal Trade Commission claims in court.

The FTC and New York State sued Vantage Point Services LLC, Payment Management Solutions Inc., and Bonified Payment Solutions Inc., as well as several of their officers, in Buffalo, N.Y. on January 5.

"Since at least April 2012, defendants have used deceptive, unfair, and abusive tactics to pressure consumers into making payments on purported debts," the complaint says.

The agency and state allege that "[i]n collection calls to consumers, when defendants identify themselves at all, they falsely claim to be a law firm, process server, an unrelated debt collection company, or government-affiliated entity."

The defendants have claimed to be calling from scores of law firms, the FBI, private investigators' offices, the plaintiffs say.

"Defendants usually transfer the consumer to an ostensibly separate 'payment processor,'" according to the lawsuit. "A different representative answers the transferred call and instructs the consumers to make a payment to the 'payment processing' company," the complaint continues, adding that the defendants also used a variety of phone numbers to deceive people.

"While defendants utilize dozens of phone numbers at any given time, they have churned through these numbers on a regular basis," the complaint says. "Defendants have employed over 500 distinct phone numbers - with scores of different area codes - since May 2013.

The defendants allegedly also claimed to operate out of multiple locations.

"Defendants have told consumers that two felony warrants would be issued for nonpayment, the consumers would be arrested within hours - or even minutes - if they did not make a payment, and that a sheriff or police officer was set to go to the consumers' work or home to arrest them," the lawsuit says. "In some cases, defendants represent that a judge is ready to sign the warrant, and if payment is not received in a matter of hours, defendants will have the warrant signed and law enforcement agents will be deployed to arrest and jail the consumer."

One of the defendants' voicemails allegedly said to "'make sure that if there are any large dogs or firearms on the premises' that they be 'out of the immediate harm's way' of the defendants and the accompanying 'uniformed officer.'" In addition, defendants advised the consumer to "please have adequate supervision for any minor children in the home."

The defendants are allegedly to have threatened "a mandatory minimum of 90 or 120 days in jail if payment is not received," with bail set in the thousands or tens of thousands of dollars.

They also allegedly threatened to sue consumers and have warned their friends, family members, and coworkers about their purported crimes.

"Defendants also have failed to provide consumers within five days after the initial communication with a statutorily-required written notice," the complaint states.

The defendants allegedly added a $12.95 "processing fee" onto each payment received.

The nine-count complaint asserts a slew of violations under the Federal Trade Commission Act, Fair Debt Collection Practices Act, and New York state law.

The plaintiffs seek a permanent injunction, monetary awards to injured consumers, a $5,000 civil penalty for each violation, and litigation costs.

Also named as defendants are the businesses' officers: Gregory MacKinnon, Megan Vandeviver, Angela Burdorf, and Joseph Ciffa.

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