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U.S district court halts debt collection agency for violating laws

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By: Good Nelly
on 19th Feb,2016

Yet another debt collection agency bites the dust for breaking federal laws. If reports are to be believed, a U.
U.S district court halts debt collection agency for violating laws


Yet another debt collection agency bites the dust for breaking federal laws. If reports are to be believed, a U.S district court issued an order to temporarily halt the business of a debt collection agency at the request of the FTC and the New York Attorney General Office. The Buffalo based debt collection agency has been accused of using false statements and threats to collect $8.7 million and more from innocent consumers.

Based on the allegations of the state attorney general and FTC, the U.S district court has frozen operation assets of the debt collection agency. The court has also chosen a temporary receiver to handle the defendants' business pending trial.

Allegation against the debt collection agency

As per the New York Attorney General and the FTC, the Buffalo based debt collection agency has lied and used scare tactics against consumers. This is a clear violation of both the federal and state laws. The debt collection agency intentionally misrepresented facts and made baseless statements which are:

  1. Consumers made check fraud
  2. Consumers committed criminal acts
  3. Consumers would be arrested if they don't pay money
  4. Consumers would be sued
  5. Consumers would lose money through wage garnishments
  6. Liens would be imposed upon their properties.

Under the federal laws, debt collection agencies can file lawsuits against consumers for genuine debts. If they win a lawsuit, then lien can be imposed upon consumer's properties. Besides, collection agency can fetch a certain amount every month from consumers through wage garnishment. So, under normal instances, the collection agency didn't make false statements. But, they broke the law since the collection agency couldn't validate the debts. Moreover, the collection agency imposed illegitimate fees upon consumers and disclosed the debt details to third parties.

This alleged debt collection agency was operated by three masterminds - Diane Bella, Luis A. Shaw and Joseph C. Bella. The collection agency collected debts in different names such as National Check Registry, Check Systems, Goldberg Maxwell, Mullins & Kane, American Mutual Holdings, Inc. Later they changed the name to eCapital Service, LLC. This is was done to avoid getting noticed and continue their illegal services without any problem. In 2013, the collection agency had signed an agreement with New York State authorities. As per the agreement, the collection agency could no longer continue their business for breaking state and federal laws.

The alleged debt collection agency has collected approximately $8.7 million through illegal means since the year 2010. They have violated the Fair Debt Collection Act, New York state laws and the Federal Trade Commission Act innumerable times and ripped off consumers over the past few years.

As per the Jessica Rich, director of the FTC's Bureau of Consumer Protection, “These 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”.

A lot of times, innocent consumers are harassed and victimized by predatory collectors. They succumb to financial bullying and lose thousands of dollars every month. The state attorney general Eric T. Schneiderman is determined to protect the overstressed consumers from predatory collectors once for all.

Key complaints against the Buffalo based collection agency

The main complaints against the debt collection agency are given below:

  • The debt collection agency asked a consumer to pay for a debt that has already been discharged in bankruptcy.
  • The collection agency imposed an extra fee of $8 when a consumer paid off a debt over phone.
  • The collection agency claimed that the only possible way to stop lawsuits, avoid getting arrested, protect wage is to pay off debt over phone.
  • A consumer was threatened to be arrested by the Washington County Police.
  • The collection agency threatened a person serving in military that they would take steps against him under the Uniform Code of Military Justice.
  • The agency contacted colleagues, friends and family members of some consumers and divulged the supposed debt details. The agency also revealed that the consumer would be sent to jail soon.
  • They accused consumers of committing check fraud and other serious criminal activities.

Another major allegation against the debt collection agency is that they provide consumers with sufficient disclosures. As such it became very difficult for consumers to understand if the debt was valid.

Final words

This is not the first time when a collection agency has violated federal laws and harassed consumers. Every year, thousands of consumers get harassed by collection agencies. Some consumers choose to remain quiet and suffer on the hands of predatory collectors. On the other hand, others go ahead and report against the deceptive practices to the FTC. If a collection agency is breaking FDCPA laws and using illegal tactics, then call 1-877-FTC-HELP instead of keeping quiet. This would help FTC to reduce scams and fraudulent activities.

Don't miss out: How collection agencies are bound by the rules of FDCPA

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