Collection Agency Fighting FTC Order to Shut Down

A Buffalo-area debt collection agency that was sued by both the FTC and the New York State Attorney General filed a motion Friday asking a judge to lift a temporary restraining order so that it can resume some business operations. The judge had previously granted the regulators’ request to have the company cease operations.

4 Star Resolution’s request noted that neither the FTC nor the NY AG’s office contacted it to voice concerns before their joint suit was filed. The company said that the TRO severely impacted its business and that it was not in keeping with enforcement actions in similar cases.

The company is specifically asking the judge to allow it to continue operations while in receivership for three particular clients. Court documents, a motion to expedite and memorandums and exhibits supporting the motion, show that the company wants continue to operate with 10 collectors and two managers while the case proceeds.

The allegations made by regulators against 4 Star, however, were fairly uncommon. Vantage Point Services, an unaffiliated company, was also named in the same press announcement from the regulators. The two cases are similar but entirely separate.

The FTC and NY AG said that 4 Star regularly called consumers using fictitious addresses, bogus company names, and spoofed phone numbers. After misrepresenting their names and locations, 4 Star’s collectors falsely identified themselves to consumers, claiming that they were attorneys, process servers, government agents, or criminal law enforcement officials.

In addition, 4 Star’s collectors allegedly falsely claimed that the consumers had committed an illegal or criminal act such as bank or check fraud. 4 Star’s collectors then falsely threatened consumers with dire consequences, including arrest, imprisonment, and civil lawsuits, unless the consumers made an immediate payment on the supposed debts.

The complaint cites several examples that illustrate the defendants’ alleged abusive and deceptive conduct. During one call to collect on a supposed debt, a 4 Star collector used the pseudonym “Detective Jeff Ramsay,” and left a message where he falsely asserted that he was seeking to serve a bench warrant on the consumer for check fraud.

In its filings last week, 4 Star calls the allegations “nonsensical and totally incredible.”

A judge in the case Monday granted 4 Star’s motion to expedite and directed the receiver to file its response by March 23 on the matter of partially reopening the business. The judge also authorized the receiver to fund payroll for the employees of the firm.