A Charlotte debt collection company and its leaders used lies, profanity and threats to trick 10,000 consumers into paying $2.1 million in “phantom debts,” money they never owed or that the agency had no right to collect, the Federal Trade Commission said.
In a recent federal court complaint, the FTC said Lombardo, Daniels & Moss LLC, principal Dion Barron and managing member Charles Montgomery III violated the FTC Act and the Fair Debt Collection Practices Act. The court issued a temporary restraining order and froze their assets last Thursday.
The defendants operated out of boiler rooms around Charlotte, the FTC said in a memo supporting the restraining order, and identified themselves with names suggesting they were with law firms, such as “Barron, Gibson & Phillips,” Lombardo, Daniels & Moss” and “Cohen, Daniels & Moss.”
Their scheme was based on tricking people into believing they were being sued and that the person contacting them was with a law firm and not a debt collector, the FTC stated in its memo, even though the defendants are not lawyers. The defendants told people they could avoid jail or lawsuits if they paid off their payday loans or other debts by credit or debit card over the phone, the FTC said in its filing.
No one answered the phone Wednesday that was listed on the Lombardo website.
In its 15-page complaint, the FTC said it is seeking a permanent injunction, restitution, refunds and other relief in connection with the defendants’ “deceptive and abusive debt collection practices” that began in early 2013. The FTC is still sorting out the scope of the alleged activities, but spokesman Frank Dorman said the estimated number of victims is “10,000ish” scattered around the country.
In its filings, the FTC said:
▪ The defendants’ collectors regularly used profanity to intimidate consumers into paying, even though federal law prohibits collectors from using such language. One collector told someone to just “pay the f------ thing” or go to jail, while another called a consumer a “lying son of a b----,” “white trash” and “not fit to hold a job” because he couldn’t pay his debts, according to the FTC filing. One collector cursed at a consumer’s 16-year-old daughter, the FTC said.
▪ One consumer agreed to pay debts she knew she didn’t owe because she was scared of getting arrested or sued and was “tired of the harassing phone calls.” When another consumer told a collector not to call him at work, he was told, “I can do anything I want to do because you are a deadbeat and you deserve to lose your job.”
▪ The repeated, abusive calls took its toll on people, the FTC stated, with one consumer saying, “I was so scared that after I hung up the phone I cried at my desk.”
Debt collection accounts for about a third of the FTC’s complaints. “Lombardo’s practices represented the worst of the worst: cursing at children, threatening consumers with jail time, harassing consumers with multiple calls a day and using other coercive techniques to get them to pay – often on debts the consumers don’t actually owe,” Dorman said in an email interview.
The FTC says people cannot be arrested for not paying their bills.
If a debt collector calls about a debt, before you agree to pay anything, ask for written proof that says how much you owe and to whom, and what to do if you don’t think you owe the money. By law, debt collectors have to send you a document called a validation notice within five days after they first contact you, the FTC said.
Contacting the FTC
Consumers with a complaint for the FTC may call 877-382-4357 or go online to file a complaint.