A U.S. district court, petitioned by the Federal Trade Commission (FTC), has shut down a Georgia-based outfit that allegedly used deception and threats to collect $3.5 million in payday loan “debts” that consumers did not owe. The court had previously ordered a freeze on the defendants’ assets to preserve the possibility of providing redress to consumers.
John Williams and two companies under his control allegedly bullied U.S. consumers into paying false payday loan debts, the FTC contends. Williams and his businesses falsely claimed to be affiliated with federal and state agents, investigators, and other law enforcement agencies. The companies also pretended to be a law firm, according to the FTC. The defendants threatened to revoke consumers' driver’s licenses and told them that they faced imminent arrest and imprisonment.
The FTC alleges that the defendants found the consumers' information because many of them had previously inquired about a payday loan online and submitted contact information. “Many consumers in this case were victimized twice,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “First when they inquired about payday loans online and their personal information was not properly safeguarded, and later, when they were harassed and intimidated by these defendants, to whom they didn’t owe any money.”
The FTC accused the defendants of violating the Federal Trade Commission Act and the Fair Debt Collection Practices Act. They also violated federal law by telling consumers’ family members, employers, and co-workers about the debt; failing to identify themselves as debt collectors; using profanity; failing to provide information in writing about the debt; and making unauthorized withdrawals from consumers’ bank accounts.