FTC Puts Texas-Based Debt Collector Out of Business

Accordingly to a recent Federal Trade Commission press release (“FTC”), a Houston-based debt collection company, Goldman Schwartz, Inc., used insults, lies, and false threats of imprisonment to collect on payday loans, which in some cases it owned and in others, it acted as a third-party debt collector.  Under the FTC settlement announced last week, the company’s owner will surrender his assets, approximately $550,000, to pay restitution to consumers who were charged unauthorized fees, often in the hundreds of dollars.  Also under the settlement, all defendants, including the company owner, two company managers, and several corporate entities, will be permanently banned from debt collection and prohibited from misrepresenting the characteristics of any financial product or service.  

The FTC had charged Goldman Schwartz, Inc. with multiple violations of both the FTC Act and the Fair Debt Collection Practices Act (“FDCPA”).  According to the Complaint, the FTC charged Goldman Schwartz, Inc. with, among other things: making false threats that consumers would be arrested, falsely claiming to be attorneys and/or working with the local sheriff’s office, disclosing debts to consumers’ employers, collecting bogus late fees and attorneys’ fees, using obscene language and calling at odd hours of the day, failing to inform consumers of their right to dispute the debts or have the debts verified, and failing to obtain the names of the original creditors.  In 2013, at the request of the FTC, a U.S. district court shut down Goldman Schwartz, Inc. and froze its assets pending the outcome of the litigation. 

The remainder of the $1.4 million judgment entered against the owner of Goldman Schwartz, Inc. by agreement is suspended based on the owner’s inability to pay, as is the judgment against the company’s managers.  However, if it is later determined that the financial information provided to the FTC by the defendants is false, the full amount of the judgment will become due. 

The recent settlement demonstrates the FTC’s continued efforts to crackdown on scams that target consumers in financial distress.  For more information on the settlement or fair debt collection statutes generally, contact Katherine Olson of Messer Strickler, Ltd. at 312-334-3444 or kolson@messerstrickler.com.