A federal court has shut down a Houston debt collector accused of using insults, lies, and phony threats to collect on payday loans.
In one case, the company -- Goldman Schwartz -- told a Virginia woman that she would be arrested and jailed for three years, and would lose her disability payments if she did not pay a $980 debt.
The court also froze the operation's assets, banned the defendants from engaging in debt collection, and appointed a receiver to take control of the business while the FTC moves forward with the case.
The firm's debt collectors also allegedly told some consumers their minor children would be taken into government custody; disclosed debts to family members and military superiors; falsely claimed to work hand-in-hand with local sheriff’s offices; and collected bogus late fees and attorneys’ fees, the Federal Trade Commission (FTC) charged.
Goldman Schwartz 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 complaint charges the defendants with multiple violations of the FTC Act and the Fair Debt Collection Practices Act, including:
- falsely representing that Goldman Schwartz is a law firm and owner Gerald Wright is an attorney named Barry Schwartz.
- falsely claiming that consumers have committed crimes by not paying their debts, will be arrested or jailed, and will lose custody of their minor children.
- falsely claiming to be affiliated with or work in conjunction with law enforcement agencies.
- harassing and abusing consumers by using obscene or profane language, calling repeatedly or continuously, and calling late in the evening or early in the morning.
- adding unauthorized late fees and attorney’s fees to the amount consumers owe on their debts, and
- failing to inform consumers of their rights to dispute the debts, have the debts verified, and obtain the names of the original creditors.