Debt Collector Accused Of Taking Money From People Who Didn’t Owe Anything

As part of its ongoing efforts to crack down on unscrupulous debt collectors, the Federal Trade Commission has accused a North Carolina company of running a “phantom” debt collection scheme that went after people for money that they did not actually owe.

The FTC announced today that it had filed a complaint accusing ACDI Group LLC and Solutions to Portfolios LLC, along with their operator Anthony Swatsworth, of collecting money from people with payday loan debts even after determining those debts were not real.

According to the complaint [PDF], in July 2014, ACDI bought a portfolio of purportedly past-due payday loans worth $992,000 from SQ Capital.

In all, the portfolio contained 2,335 records of purported debts owed issued by payday lender 500FastCash. Information contained in the records included the individual’s name, address, Social Security number, telephone number, email address, loan amount, amount due, and bank account information.

Immediately after purchasing the debts, the FTC claims, ACDI began contacting borrowers to collect on the debts.

However, in many cases, the individuals contacted by the company protested the purported debts, at times even providing evidence that they had never authorized a payday loan from 500FastCash, the complaint states.

ACDI then reported the high number of complaints to UDH, the broker that arranged the purchase of the debt portfolio from SQ Capital.

UDH told ACDI to stop collecting on the debts in Aug. 2014, noting that multiple alleged borrowers were complaining that they had never taken out the loans, the FTC claims. In September, ACDI received a full refund for the portfolio.

According to the FTC, since the debts SQ Capital sold were counterfeit, ACDI had no right to collect on them. Despite this, the complaint alleges that ACDI continued to collect on the fake debts for at least seven months.

In all, the FTC claims that ACDI collected and processed at least $30,000 in payments for alleged debts that were not owed and the company had no authority to collect.

The FTC charged that ACDI with violating the FTC Act and the Fair Debt Collection Practices Act, and seeks to refund individuals affected by the fake debt collection scheme.