FTC Lawsuit Temporarily Halts ‘Phantom Debt Collection’ Scheme

The Federal Trade Commission (FTC) said Monday (March 3) that its lawsuit led a federal court to temporarily halt the operations and freeze the assets of a “phantom debt collection” scheme and its operators.

The commission’s complaint alleges that the operators of the scheme are Ryan and Mitchell Evans and their affiliated companies that have operated under the names Blackrock Services, Blackstone Legal Group, Capital Legal Services, Quest Legal Group, Viking Legal Services, and others, according to a Monday press release.

The complaint alleges that the scheme also operated under the names of unaffiliated existing businesses and law firms, per the release.

The FTC complaint alleges that debt collectors working for the operators and their affiliated companies called or wrote to consumers to collect on debts that never existed; threatened legal action that they had no basis to undertake; and falsely claimed that the fictitious debt could damage consumers’ credit and that a payment to settle the debt would lessen that harm, according to the release.

“The complaint notes that letters sent by the operators often contain a wealth of sensitive personal information about the consumer, including the last four digits of their Social Security number, leading consumers to believe the letter may be legitimate,” the release said.

In its complaint, the FTC asks the court to stop the defendants’ alleged unlawful conduct and provide redress to consumers they harmed, per the release.

In another, separate case, the FTC said Dec. 10 that it began sending over $540,000 in refunds to consumers harmed by a debt collection scheme.

The refunds followed the FTC’s filing of lawsuits in September 2020 and reaching settlements in March 2021 and December 2021 with National Landmark Logistics and Absolute Financial Services, which also operated under other names.

In the settlements, the defendants were permanently banned from the debt collection industry and were required to pay money to compensate the consumers.

In November, the FTC took action against Global Circulation and its owner, Kenneth Redon, III, alleging that the debt collector tricked consumers into paying more than $7.6 million in bogus debt by threatening them with unlawful actions.