FTC and New York File Lawsuit to Shutdown Phantom Debt Collection Scheme

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The Federal Trade Commission (FTC) and New York Attorney General’s Office filed a joint lawsuit to shutdown phantom debt collection scheme.

The lawsuit is part of the FTC’s ongoing crackdown against the operators of phantom debt chain including those selling fake debt portfolios and harrasing consumers to collect phony debt.

The defendants in the lawsuit include Hylan Management LLC and its owner Andrew Shaevel and Worldwide Processing Group, LLC and its owner Frank Ungaro Jr.

In the complaint, the FTC and New York AG’s Office alleged that the defendants violated the FTC Act and New York’s fair debt collection statute. They also violated the state’s laws prohibiting deceptive practices.

Additionally, the Commission and the AG’s Office accused some of the defendants of violating the Fair Debt Collection Practices Act.

Allegations against phantom debt chain operators            

According to the lawsuit, Hylan and its owner Shaevel knew that some of their debt portfolios are fraudulent.  They received fake debts that consumers did not owe  from Joel Tucker and Hirsh Mohindra—known peddlers of phantom debt. Despite the knowledge, they still placed the fake debts for collection.

On the other hand, Worldwide Processing Group frequently collected phantom debt it received from Hylan. The firm and its owner Ungaro Jr knew that they were collecting fake debts, but did it anyway. They also threatened and harassed consumers to collect the fake debts, a violation of state and federal laws.

Worldwide Processing engaged in illegal collection practices. The firm failed to provide consumers with required notices regarding the debt. It also failed to give consumers notices regarding their rights to dispute the debt.

In a statement, New York AG Barbara Underwood said, “It’s unconscionable to collect on fake debts that consumers don’t actually owe in order to make a quick buck. We’ll continue to work with our partners in government to hold these phantom debt collectors accountable.”