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FTC to send $4 million in payments to victims of Stark Law phantom debt collection scheme

Consumers were harassed into paying debts they didn’t owe

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Photo (c) JGI/Tom Grill - Getty Images
The Federal Trade Commission and the Office of the Illinois Attorney General are sending $4 million in payments to more than 10,000 consumers who were duped into giving money to the operators of a fraudulent debt collection agency. 

Consumers who fell victim to the scheme were tricked into paying debts that they either didn’t owe or that the defendants weren’t authorized to collect. 

The defendants did business under a number of names, including Stark Law, Stark Recovery, and Capital Harris Miller & Associates. The people behind the scheme allegedly harassed consumers with phone calls and demanded immediate payment for supposedly delinquent loans. 

Victims would sometimes be threatened with lawsuits or arrests and were told they would be charged with “defrauding a financial institution” or “passing a bad check,” even though failing to pay a private debt is not a crime. 

‘Brazen’ scam 

The complaint noted that many consumers ended up paying the debts they supposedly owed (even if they didn’t actually owe them) simply because they wanted to put an end to the calls and alleged threats.

The case is part of the FTC’s “Operation Collection Protection,” which aims to crack down on parties subjecting consumers to illegal debt collection tactics. 

“It’s illegal to harass people to pay debts they clearly don’t owe, and to sell phony debts to other debt collectors,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “We’re proud to partner with the Illinois Attorney General to halt these egregious debt collection practices.”

“Phantom debt collection is one of the most brazen scams today,” said Illinois Attorney General Lisa Madigan. “With the FTC, we are working to protect consumers by shutting down these scam operations.”

Consumers affected by this scam are receiving full refunds -- an average of $375 each. The FTC says consumers who receive checks should deposit or cash them within 90 days. 

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