BUFFALO, N.Y. (Legal Newsline) - New York Attorney General Eric Schneiderman announced agreements on Thursday with two western New York debt collectors that allegedly engaged in deceptive practices to trick consumers into believing they were in legal trouble.
The first agreement was with John Chebat, an operator of several debt collection businesses in the Buffalo area, including Check Systems Recovery LLC, Argos Alliance Group LLC, Outsourced Legal Prep LLC, Unified Asset Solutions LLC, International Asset Group LLC and Western New York Capital Inc.
Under the terms of the agreement, Chebat must change his debt collection practices and pay $175,000 in penalties.
Among many charges, Chebat and his collectors were accused of falsely implying to consumers that they took civil judgments when that was not the case.
"Our Buffalo regional office received hundreds of complaints from consumers about (Chebat collectors)," Schneiderman said. "We have also seen a trend where debt collectors engage in shameful practices like spoofing to trick people into thinking that they are in trouble with the law when they are not. Debt collectors, like all other businesses in New York, must play by the rules or we will hold them accountable."
In addition to paying $175,000, Chebat must appoint a compliance officer responsible for making sure that Chebat's collectors are compliant with the law.
The second agreement was with The Lombardo Davis Goldman Firm LLC and owner Frank Davis. Davis allegedly violated a 2011 agreement discouraging him and his employees from engaging in illegal and improper conduct. Under the terms of the new agreement, Davis agreed to shut down his debt collection agency and pay an additional $5,000 penalty. Davis is also barred from participating in a consumer debt collection business in the state of New York.
In 2011, Frank Davis was ordered to stop using a name that mimicked an unrelated law firm's name, install an employee monitoring system to stop employees from engaging in illegal and improper conduct and pay a $20,000 penalty. Davis' website allegedly used a photo of a gavel and law books and made reference to litigation experts to further mimic a law firm.
Schneiderman's office looked into Davis' practices again in early 2012 and alleged that he violated the original settlement. Davis allegedly continued to use a name similar to a law firm, failed to disclose that he changed the name and location of his business, and failed to monitor his employees to ensure their compliance with the law.
"More and more debt collectors are giving their businesses names that mimic law firms as a way to deceive individuals into thinking they are in legal trouble," Schneiderman said. "Predatory scams that prey on Western New Yorkers will not be tolerated. These settlements put dishonest businesses that engage into deceptive practices on notice. Our office will prosecute unscrupulous debt collectors to the fullest extent of the law."