A federal court has ordered a stop to debt collection practices that targeted Hispanics. The court found the practices were illegal, and in every case, the harassed consumers did not owe the alleged debt.
“Lying to consumers about debts they don’t owe and harassing and threatening them when they don't pay are illegal business practices, period,” said Lydia Parnes, Director of the FTC’s Bureau of Consumer Protection. “We will aggressively pursue companies that use these tactics to extort money from consumers.”
According to the FTC’s complaint, from 2003 to 2005 the defendants sold an English-language instruction course, “Inglés con Ritmo,” advertised on Spanish-language television and the defendants’ Web sites, www.tonorecords.com and www.tonomusic.com, stating that it was free due to government or non-profit subsidies.
Inquiring consumers were told that a shipping and handling fee of $100 to $169 applied.
Since 2006, the complaint states, the defendants, posing as third-party debt collectors, told consumers they owed money, typically $900, and repeatedly called them, even though the evidence shows that they owe no money.
The defendants are charged with violating the FTC Act and the Fair Debt Collection Practices Act (FDCPA) by falsely claiming that a debt is owed; by falsely claiming to be, or to represent, an attorney; and by falsely threatening legal action, arrest, imprisonment, property seizure, or garnishment of wages.
Other FDCPA violations alleged are attempting to collect an amount of debt not authorized by contract or permitted by law; harassing consumers; and failing to inform consumers, within five days of their initial communication with them, of their right to dispute and obtain verification of their debt and the name of the original creditor.
The defendants are Tono Records, dba Tono Music and Professional Legal Services, Tono Publishing, Promo Music, Millennium Three Corp., Dulce Ugalde, Luis Roberto Ruiz, and Maria Oceguera, all based in Los Angeles County, California.
Earlier this month a U.S. district court judge ordered an ex parte temporary restraining order freezing the defendants’ assets. The FTC seeks to permanently bar them from further violations and make them forfeit their ill-gotten gains.