The U.S. Federal Trade Commission shut down a Texas-based debt collector, Goldman Schwartz as part of an ongoing crackdown on abusive debt collectors on January 31, 2013. Goldman Schwartz violated the Fair Debt Collection Practices Act by allegedly using deceptive and abusive scare tactics to force consumers to pay their payday loan debts.
The operation did business nationwide collecting debts for numerous payday loan companies, including Ace Cash Express, Advance America, Allied Cash Advance, Checkmate, First Cash Advance, and MoneyMart.
The Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from threatening violence, using profane language, calling incessantly, inflating a debt and implying they are attorneys. Debt collectors CANNOT tell consumers or imply they will arrest them or garnish their wages or property unless they actually plan to take that legal action.
Below is exactly what the FDCPA says regarding this issue:
“§ 807. False or misleading representations
A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:
(3) The false representation or implication that any individual is an attorney or that any communication is from an attorney.
(4) The representation or implication that nonpayment of any debt will result in the arrest or imprisonment of any person or the seizure, garnishment, attachment, or sale of any property or wages of any person unless such action is lawful and the debt collector or creditor intends to take such action.
(5) The threat to take any action that cannot legally be taken or that is not intended to be taken.”
In the case of Goldman Schwartz, the FTC found outrageous abuses of the FDCPA and here are just a few:
Incessant Harassing Calls. Goldman Schwartz debt collectors allegedly called consumers repeatedly, saying “we can take you to jail” or “we’ll send the sheriff’s department to your job and take care of this the hard way,” even though they had no legal basis to do so.
Threatening to take away children. Goldman Schwartz collectors threatened consumers by telling them they would go to jail and child protective services would take their minor children into government custody.
The FTC Complaint includes a Virginia woman’s harrowing story of being told she would be arrested and jailed for three years, and would lose her disability payments if she did not pay a $980 debt.
Posing as a law firm. Goldman Schwartz is not a law firm yet, in order to scare consumers into paying, they allegedly posed as a law firm claiming owner Gerald Wright is an attorney named Barry Schwartz. They even went as far as claiming to work with law enforcement authorities.
Fraudulent Fees. On top of all the alleged violations of the FDCPA, Goldman Schwartz even charged unauthorized attorney’s fees that it referred to as “juice.”
Goldman Schwartz principal location is: Goldman Schwartz INC of 10333 Harwin Drive, Suite 100, Houston, Texas, 77036. They have not responded to the complaint filed by the FTC. The court has frozen the operation’s assets along with banning defendants from engaging in debt collection, and appointed a receiver to take control of the business while the FTC moves forward with the case.