Debt Management and Settlement

As a result of a Federal Trade Commission lawsuit, a federal court hastemporarily halted the operations and frozen the assets of a phantom debt collection scheme and its operators.

The scheme has operated under numerous names, including Blackrock Services, Blackstone Legal Group, Capital Legal Services, Quest Legal Group, Viking Legal Services, and others.

According to the FTC’s complaint,debt collectors working for the scheme’s operators and their affiliated companies have sent consumers deceptive warning and collection letters or called them directly, claiming that consumers owed a debt of some kind and threatening legal action, wage garnishment, negative impacts to consumers’ credit, and even arrest if they don’t pay.

The debts described in these letters and calls never existed, according to the complaint, and the defendants have no basis to make legal threats toward consumers.

The complaint further alleges that the defendants have sent letters and made phone calls to consumers claiming they owed money to a payday lender, and that the purported “law firm” contacting the consumer will imminently be filing suit against the consumer if the consumer does not pay up.

The letters and calls also claim that consumers’ credit will be damaged by the fictitious debt, and that if consumers agree to pay to settle that debt, the harm to their credit could be lessened.

All of the claims in these letters and calls are false, according to the complaint.

Sensitive personal information

The complaint notes that the letters sent by the operators often contain a wealth of sensitive personal information about the consumer, including the last four digits of their Social Security number, leading consumers to believe the letter may be legitimate.

When consumers visit the websites set up by the defendants for the bogus debt collection companies, they are again faced with false warnings that failure to pay these fake debts could result in garnishment of the consumer’s wages, along with lawsuits and impacts to their credit.

In follow-up calls, the threats increase, with collectors falsely telling consumers that they have defrauded a financial institution, could be arrested at their workplace, or that their homes could be seized if they do not settle, according to the complaint.

According to the complaint, the scheme has operated under a wide variety of names, including the names of unaffiliated existing businesses and law firms, in violation of the FTC’s Rule on Impersonating Government and Businesses. In addition, the complaint alleges that the defendants have regularly failed to follow numerous requirements set out by the Fair Debt Collection Practices Act, including disclosing that they are debt collectors when their collectors contact consumers.

Car prices and the resulting monthly payments have been rising rapidly in recent years. As of the third quarter of 2024, the average monthly payment in the United States was $737, according to Lending Tree. 

And now, the Consumer Financial Protection Bureau (CFPB) reports that the rate of auto repossessions at the end of 2022 surpassed pre-pandemic levels.

To make matters worse, lenders were increasingly more likely to use third parties, called forwarders, to manage the repossession process. The use of a third party generally increases consumer costs.

“Supply chain shocks and higher interest rates drove up costs to purchase and finance a car,” said CFPB Director Rohit Chopra. “With outstanding auto loans exceeding a trillion dollars, it’s critical that borrowers can avoid the costly consequences of repossession.”

The CFPB analyzed data from nine major auto lenders covering accounts with activity between 2018 and 2022. The data show increasing consumer risk in the $1.64 trillion auto loan market.

Second-biggest purchase

Cars are the second-biggest purchase most consumers make and, not surprisingly, represent one of the largest sources of consumer credit outside of mortgage lending, with more than 100 million active auto finance accounts and $63 billion in new monthly originations as of April 2024.

When vehicles are repossessed, consumers often lose their primary transportation to work, may be required to repay outstanding balances plus repossession fees, and may see additional negative impacts to their credit scores.

Key findings in the report include:

• Vehicles eligible for repossession exceeded pre-pandemic levels: In the month of December 2022, 0.75% of all outstanding vehicle loans were assigned to repossession – a 22.5% increase from December 2019 (0.61%).
• Repossessions completed using forwarders had higher costs charged to borrowers: Lenders’ use of third-party repossession forwarding companies increased from 31% in January 2018 to 66% in December 2022. Average repossession costs charged to consumers were higher when a forwarder was used.
• Consumers still owed thousands after repossession: Consumers can continue to owe money on their vehicle even after it is repossessed and sold by the lender. The average outstanding balance for consumers that had an outstanding balance after repossession in December 2019 was more than $10,000. Following a brief drop, the average outstanding balance sharply increased and was more than $11,000 in December 2022.

The Federal Trade Commission (FTC) is sending over $5 million in refunds to people who were affected by a deceptive credit card debt relief scam run by ACRO Services.

The company, which also used names like American Consumer Rights Organization and Tri Star Consumer Group, falsely promised to reduce or eliminate consumers' credit card debt in 12 to 18 months. They charged illegal upfront fees and monthly fees for services like credit monitoring.

The company and its owners have agreed to stop working in debt relief and telemarketing, and they gave up assets to help pay back affected consumers. A total of 7,687 people are receiving checks. These checks should be cashed within 90 days.

Consumers who have questions about their payment should contact the refund administrator, JND Legal Administration, at 877-753-2846, or visit the FTC website to view frequently asked questions about the refund process. The Commission never requires people to pay money or provide account information to get a refund.