FTC order prohibits collection of “phantom debts” by Georgia firm

150px-US-FederalTradeCommission-Seal.svgA U.S. district court in Atlanta, Ga., recently issued an order that prohibits a firm based in the state from using threats and deceptive tactics to collect $3.5 million payday loan debts not owed by consumers.

According to the FTC, Georgia resident John Williams and two companies he controls allegedly violated the FTC Act and Fair Debt Collection Practices Act by using a number of false threats to push consumers across the country into paying debts on payday loans they had inquired about but never took out.

The defendants allegedly falsely claimed to be affiliated with federal and state authorities and law firms and told consumers their drivers’ licenses would be revoked and that they would face imprisonment and criminal charges.

The FTC said many consumers had submitted contact information after inquiring about payday loans online that was then allegedly used by the companies to make contact with consumers.

“Many consumers in this case were victimized twice,” Jessica Rich, the director of the FTC’s Bureau of Consumer Protection, said. “First when they inquired about payday loans online and their personal information was not properly safeguarded, and later, when they were harassed and intimidated by these defendants, to whom they didn’t owe any money.”

The case is the sixth recent case heard by the FTC regarding “phantom debt” scams with alleged violations of federal laws.

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