In what might be the first enforcement action related to the debt collection industry under the Trump administration, the Federal Trade Commission yesterday announced a proposed permanent injunction against against Global Circulation and its owner, Kenneth Redon III, for engaging in a fraudulent debt collection scheme. The FTC’s investigation revealed that the company and Redon used deceptive tactics to force consumers into paying debts they did not owe. The FTC filed an amended complaint this week, detailing violations of the Federal Trade Commission Act, the Fair Debt Collection Practices Act, the Gramm-Leach-Bliley Act, and the FTC’s Impersonation Rule.
Last November, the FTC secured a temporary restraining order that halted the operations of GCI and froze its assets. The alleged scheme included threatening consumers with arrest, wage garnishment, and lawsuits to coerce them into paying non-existent or invalid debts. Further allegations include GCI and Redon misrepresenting their affiliation with legitimate creditors to convince consumers their debts were legitimate.
The allegations: The FTC’s amended complaint outlined several unlawful practices employed by GCI and Redon, including:
- Deceptive Communications: Consumers were contacted using multiple fictitious business names, where GCI representatives threatened arrest, legal action, or wage garnishment. The company did not disclose that they were debt collectors, violating the FDCPA’s requirement to identify themselves as such.
- Impersonation and False Claims: GCI falsely claimed affiliations with well-known payday lenders like ACE Cash Express and CashNet USA. They fabricated debts and misrepresented themselves as being authorized to collect on them, causing many consumers to believe the debts were legitimate.
- Illegal Use of Consumer Data: The defendants unlawfully obtained private consumer data, including Social Security numbers, credit card information, and bank account details, violating the Gramm-Leach-Bliley Act.
- Harassment: GCI employees repeatedly contacted consumers, sometimes calling up to seven times a week, and contacted family members to pressure individuals into paying, even after they had located the consumers themselves.
- Threatening Legal Action: In many cases, GCI threatened consumers with immediate legal action, such as lawsuits or arrest warrants, despite having no legal grounds to follow through on these threats.
The proposed order: The FTC has proposed a permanent injunction that would ban GCI and Redon from participating in debt collection or brokering activities. In addition to this ban, the proposed order imposes a monetary judgment of $9,684,338, which will be suspended contingent on the defendants turning over their remaining assets. If GCI and Redon are found to have lied about their finances, the full amount will be owed.
The order also includes other measures aimed at preventing future violations, including:
- A requirement to provide consumer redress if necessary.
- A prohibition on misrepresenting affiliations or legal obligations related to debt collection.
- A permanent ban on obtaining consumer information through fraudulent means.
Read the order. Read the amended complaint
