Federal Trade Commission v. Federal Check Processing

Case Type:
Case Status:
16-3811-cv, 16-3805-cv (2nd Circuit, Jan 11,2019) Published
By summary judgment in favor of the FTC, individual defendant was responsible for debt collection practices of his businesses that violated the Federal Debt Collection Practices Act and the FTCA because the evidence established as a matter of law that he had control over the companies' affairs and was aware of their illegal practices. Also, the disgorgement order assessed a reasonable approximation of the total amounts received by the companies from consumers as a result of the unlawful acts.
Procedural context:
Appeal from decision of the United States District Court for the Western District of New York (William M. Skretny, Judge), granting summary judgment in favor of plaintiff, the FTC, adopting the report and recommendation of Magistrate Judge Michael J. Roemer. Court of Appeals affirmed.
Individuals owned and directed several corporate entities that were part of a "payday loan" debt collection enterprise, buying consumer debt and compiling it into portfolios. Numerous employees of the companies routinely contacted debtors by telephone and falsely identified themselves, including saying that they were part of a "fraud unit" and accusing the debtors of fraud or related crimes and threatening them with criminal prosecution if they did not pay their debts. Employees also sometimes called friends, family, employers, or co-workers of debtors and told them that the debtors committed crimes by failing to pay debts they owed, among other things. There were numerous consumer complaints about these activities, and such activities persisted (including through newly-formed entities) even after investigations began and the individual defendants attested that the companies had implemented procedures to ensure that they were not engaging in prohibited collection activities and met the requirements of the Federal Debt Collection Practices Act. The FTC filed a complaint against the individuals and the companies for unfair or deceptive acts or practices under the Federal Trade Commission Act and for debt collection practice violations under the FDCPA. The companies did not dispute the allegations, but the individuals asserted that they were not liable for the companies' actions and asserted that the government's requested relief (disgorgement of more than $10 million) was grossly excessive. The district court granted summary judgment in favor of the FTC and against the individuals. One of the individual defendants did not file a brief on appeal, so his appeal was dismissed, and the Court of Appeals addressed the merits of the other individual defendant's appeal and affirmed the decision of the district court.
Cabranes, Sack, and Parker, Circuit Judges

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