Federal Trade Commission v. ACDI Group, LLC et al
Filing
69
ORDER FOR PERMANENT INJUNCTION AND JUDGMENT in favor of Federal Trade Commission against ACDI Group, LLC, Solutions to Portfolios, LLC, Anthony Swatsworth. Signed by Senior Judge Graham Mullen on 12/02/2019. (ctb) (Additional attachment(s) added, per 70 Order on 12/10/2019: # 1 Attachment A) (ctb).
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
NO. 3:17-cv-340-GCM
FEDERAL TRADE COMMISSION,
Plaintiff,
v.
ORDER
ANTHONY SWATSWORTH,
ACDI GROUP, LLC, and
SOLUTIONS TO PORTFOLIOS, LLC,
Defendants.
ORDER FOR PERMANENT INJUNCTION AND JUDGMENT
Plaintiff Federal Trade Commission (“FTC”) filed a complaint on June 22, 2017 seeking a
permanent injunction and other equitable relief, pursuant to Section 13(b) of the Federal Trade
Commission Act (“FTC Act”), 15 U.S.C. § 53(b) and Section 814(a) of the Fair Debt Collection
Practices Act (“FDCPA”), 15 U.S.C. § 1692l(a). Plaintiff has moved for summary judgment
pursuant to Federal Rule of Civil Procedure 56 on all counts against Defendants ACDI Group,
LLC (“ACDI”), Solutions to Portfolios, LLC, d/b/a STP Management Group (“STP”), and
Anthony Swatsworth (collectively, “Defendants”). On August 22, 2018, the Court granted in part
and denied in part the FTC’s motion for summary judgment, finding that Defendants violated the
FTC Act and that ACDI and STP violated the FDCPA. (ECF No. 56.) On August 23, 2018, the
Court heard argument from the parties regarding injunctive relief, during which the Court
expressed concerns about the compliance and monitoring provisions and other terms in the FTC’s
proposed order. On August 24, 2018, the Court entered an order holding Defendants jointly and
severally liable for repayment of $31,763.54 to injured consumers, directing Defendants to
reimburse consumers directly and bear the costs of such reimbursement, and directing the parties
to provide supplemental briefing on the issue of injunctive relief. (ECF No. 57.) The Court, having
considered the parties’ submissions, enters this Order for Permanent Injunction and Monetary
Judgment (“Order”) to resolve all remaining matters in dispute in this action.
DEFINITIONS
For the purpose of this Order, the following definitions apply:
A.
“Debt” means any obligation or alleged obligation to pay money arising out of a
transaction, whether or not such obligation has been reduced to judgment.
B.
“Debt collection activities” means any activities of a debt collector to collect or attempt
to collect, directly or indirectly, a debt owed or due, or asserted to be owed or due.
C.
“Debt collector” means any person who uses any instrumentality of interstate commerce
or the mail in any business the principal purpose of which is the collection of any debts,
or who regularly collects or attempts to collect, directly or indirectly, debts owed or due
or asserted to be owed or due another. The term also includes any creditor who, in the
process of collecting its own debts, uses any name other than its own that would indicate
that a third person is collecting or attempting to collect such debts. The term also includes
any person to the extent that such person collects or attempts to collect any debt that was
in default at the time it was obtained by such person.
D.
“Defendants” means the Individual Defendant and the Corporate Defendants,
individually, collectively, or in any combination, and each of them by whatever names
each might be known.
1.
“Corporate Defendants” means ACDI Group, LLC and Solutions to
Portfolios, LLC, d/b/a STP Management Group, and their successors,
assigns, affiliates, or subsidiaries, and each of them by whatever names
each might be known.
2. “Individual Defendant” means Anthony Swatsworth.
E. “Investigation” includes objectively evaluating the circumstances and considering
information, including an assessment of the relevance, reliability, accuracy, integrity, and
completeness of such information, to determine whether a debtor owes a debt in the
amount asserted by Defendants while collecting on debt. The information Defendants
shall assess in an Investigation, where applicable, shall include but not be limited to:
1.
the information that Defendants received from the credit originator or the
creditor to whom the debt is owed, such as: (a) the debtor’s credit
application, (b) the credit contract between the debtor and the credit
originator, (c) documents with the current or former name, address, and
telephone phone number of the debtor, (d) documents with the debtor’s
account number, in whole or in part, and account statements, (e) documents
with the date and amount of any payments, (f) documents with the date and
outstanding balance at charge-off, and (g) collector’s notes;
2.
the information that Defendants received from data aggregators, data
brokers, consumer reporting agencies, skip tracers, and other third-parties,
such as: (a) documents with the current or former name, address, and
telephone number of the debtor, (b) documents with consumer report
information, including credit scores and updates to the information in
credit reports, and (c) the scoring of the debt through the use of a predictive
model;
3.
the information that Defendants created or maintained in collecting on the
debt, such as collectors’ notes; and
4.
the information Defendants received from the debtor denying, disputing,
or challenging the claim that the debtor owes the debt or the amount of the
debt, such as: (a) documents with the debtor’s current or former name,
address, and telephone number, (b) receipts or other evidence of payment
from the credit originator, the creditor to whom the debt is owed, or a debt
collector, (c) canceled checks, bank account statements, credit card
statements, and other documents evidencing payment, and (d) a consumer
report relevant to the disputed item.
F.
“Person” means a natural person, an organization or other legal entity, including a
corporation, partnership, sole proprietorship, limited liability company, association,
cooperative, or any other group or combination acting as an entity.
G.
“Portfolio” means the portfolio of purported past-due payday loan debt purchased by
ACDI from SQ Capital, LLC on or about July 24, 2014, containing 2335 records of
purported “500FastCash” debt.
H.
The terms “and” and “or” shall be construed conjunctively or disjunctively as necessary
to make the applicable phrase or sentence inclusive rather than exclusive.
FINDINGS
1.
Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), empowers this Court to issue injunctive
and other relief against violations of the FTC Act and, in the exercise of its equitable
jurisdiction, to award redress and restitution to remedy the injury to consumers, to order
disgorgement of profits resulting from Defendants’ unlawful acts or practices, and issue
other ancillary equitable relief.
2.
The Individual Defendant and the Corporate Defendants are likely to continue to engage
in the activities alleged in the Complaint or otherwise violate the FTC Act and the FDCPA
unless they are prohibited from doing so by order of the Court. Accordingly, it is proper
in this case to issue a permanent injunction that, inter alia: (a) prohibits Defendants from
engaging in any debt collection violations; (b) requires Defendants reasonably investigate
debts that are disputed; (c) prohibits Defendants from disclosing, using, or benefitting
from previously obtained consumer information that is unverified; and (d) provides for
monitoring by Plaintiff of Defendants’ compliance with such a permanent injunction.
3.
Defendants have caused consumer injury in the amount of at least $31,397.29.
4.
It is proper in this case to enter a monetary judgment in the amount of $31,397.29 against
Defendant Swatsworth and the Corporate Defendants, jointly and severally, as equitable
monetary relief in the form of restitution.
5.
This action and the relief awarded herein are in addition to, and not in lieu of, other
remedies that may be provided by law, including both civil and criminal remedies.
6.
Pursuant to Federal Rule of Civil Procedure 65(d), the provisions of this Order are binding
upon each Defendant, their successors and assigns, and their officers, agents, employees
and attorneys, and upon those persons or entities in active concert or participation with
them who receive actual notice of this Order by personal service or otherwise.
7.
Entry of this Order is in the public interest.
ORDER
INJUNCTION AGAINST UNLAWFUL COLLECTION PRACTICES
I.
IT IS THEREFORE ORDERED that Defendants, Defendants’ officers, agents,
employees, and all other persons in active concert or participation with any of them, who
receive actual notice of this Order, whether acting directly or indirectly, in connection
with debt collection activities, are permanently restrained and enjoined from:
A.
Using any false, deceptive, or misleading representation or means, including, but
not limited to, falsely representing, directly or indirectly, expressly or by
implication:
1.
that Defendants have authority to collect on a debt;
2.
the character, amount or legal status of any debt;
3.
that a consumer is delinquent on a debt;
4.
that a consumer can be sued, arrested, or imprisoned for failing to pay a
debt; and
5.
B.
any other material fact; and
Violating any provision of the Fair Debt Collection Practices Act, 15 U.S.C. §§
1692-1692(p) (a copy of which is attached hereto as Attachment A), including, but
not limited to, Section 807, 15 U.S.C. § 1692e.
INJUNCTION AGAINST UNSUBSTANTIATED CLAIMS
II.
IT IS FURTHER ORDERED that Defendants, Defendants’ officers, agents, employees,
and all other persons in active concert or participation with any of them, who receive
actual notice of this Order, whether acting directly or indirectly, in connection with debt
collection activities, are permanently restrained and enjoined from:
A. Representing, expressly or by implication, that a debtor owes a debt, that Defendants
have authority to collect on a debt, or the amount of a debt, when, at the time of the
representation, Defendants do not have a reasonable basis for such a representation,
including but not limited to instances where:
1.
Debtors have disputed or attempted to dispute the validity or accuracy of the
debt and Defendants have failed to review information substantiating the amount
of debt, or failed to consider the debtors’ disputes, prior to continuing collection;
or
2.
Defendants have knowledge or reason to believe that a specific debt portfolio
contains unreliable data but fail to obtain information substantiating the accuracy
of the data prior to collecting; and
B.
Failing, after a debtor denies, disputes, or challenges the Defendants’ claim that the
debtor owes the debt, or owes the debt in the amount asserted, to:
1.
within fourteen (14) days after the denial, dispute, or challenge, or when the debt
is next reported to a consumer reporting agency, if earlier: report the debt as
disputed or request deletion of that item from the debtor’s credit reporting file
by any credit reporting agency to which the debt was reported by Defendants;
and
2.
promptly after the denial, dispute, or challenge:
(a)
cease collection, and not sell, provide, or transfer the debt to any person or
entity other than the creditor to whom the debt is owed; or
(b)
commence and complete, within thirty (30) days after a debtor denies,
disputes, or challenges Defendants’ claim that the debtor owes the debt or
that it owes the debt in the amount asserted, an Investigation of the denial,
dispute, or challenge, provided that Defendants shall not be required to
investigate any denial, dispute, or challenge more than once unless the
debtor provides to Defendants or the Defendants otherwise acquire or
obtain information, data, or documentation that was not considered in any
prior investigation. Defendants shall notify the debtor within five (5)
business days if the denial, dispute, or challenge is not investigated under
this proviso.
(i)
if Defendants reasonably conclude after their Investigation that the
debtor owes the debt in the amount asserted, Defendants, within five
(5) days of reaching their conclusion, shall provide verification of the
debt to the debtor, inform the debtor of their conclusion, and provide
the basis for it, after which they may continue collection. If the debtor
continues to dispute the debt, nothing in this order supersedes the
requirement of § 623(a)(3) of the Fair Credit Reporting Act
(“FCRA”), 15 U.S.C. § 1681s- 2(a)(3), that Defendants convey the
dispute when furnishing information on the debt to any consumer
reporting agency.
(ii)
if Defendants reasonably conclude after their Investigation that the
debtor does not owe the debt or the debt cannot be verified,
Defendants shall, within five (5) days of reaching their conclusion:
(a) inform the debtor of their conclusion and the basis for it; (b)
request that each consumer reporting agency to which the debt has
been reported delete the debt from the debtor’s credit reporting file;
(c) cease collection; and (d) not sell, provide, or transfer the debt to
any person or entity other than the creditor to whom the debt is
allegedly owed.
(iii) if Defendants reasonably conclude after their Investigation that the
debtor does owe the debt but not in the amount that Defendants
asserted, Defendants shall, within five (5) days of reaching their
conclusion: (a) inform the debtor of their conclusion and the basis for
it; and (b) provide to each consumer reporting agency to which the
debt has been reported any correction to the reported information that
is necessary to make the information provided by Defendants
accurate, after which they may continue collection.
Provided that, if the debtor initiates contact with Defendants by any means, Defendants
may respond to the debtor prior to the completion of the Investigation.
Provided further that, nothing in this Part affects Defendants’ obligation to comply with
all applicable provisions of the FDCPA and the FCRA.
Provided further that, nothing in this Part prohibits Defendants from requiring debtors
who deny, dispute, or challenge a debt on the grounds of fraud or identity theft to do so in
writing, so long as Defendants clearly and conspicuously disclose these requirements to debtors.
Once Defendant receives an identity theft report, the requirements of § 623(a)(6)(B) of the
FCRA, 15 U.S.C. § 1681s-2(a)(6)(B), apply.
MONETARY RELIEF AND CONSUMER REDRESS
III.
IT IS FURTHER ORDERED that
A.
As ordered by the Court on October 11, 2018, judgment in the amount of THIRTY
ONE THOUSAND, SEVEN HUNDRED SIXTY THREE DOLLARS AND
FIFTY FOUR CENTS ($31,763.54) is entered against Defendants, jointly and
severally, as equitable monetary relief.
B.
As ordered by the Court on August 24, 2018, Defendants shall refund all
($31,763.54) in payments they received from consumers in connection with the
Portfolio and bear the costs of such redress.
C.
If any consumer’s check is returned as undeliverable, Defendants shall perform
skiptracing or a public records search to attempt to obtain additional address
information for such consumer. Defendants shall report to the Court and
simultaneously the FTC failed deliveries and additional address information as set
forth below.
D.
Defendants shall provide periodic reports to the Court and simultaneously the FTC
regarding their efforts to make redress payments to consumers. Such reports will
detail, for each consumer to whom a refund payment is owed: (a) the consumer’s
name and phone number, (b) the check amount, (c) the check number, (d) the
address(es) of the mailing attempt(s), (e) the date(s) of the mailing attempt(s), (f)
whether the consumer cashed the check, (g) whether the envelope was returned as
undeliverable, (h) the results of skiptracing or other public records searches for
consumers whose mailing was returned as undeliverable, (i) and such other
information regarding Defendants’ redress efforts that the FTC reasonably requests.
Such reports shall be submitted to the Court under seal and sent via email to an FTC
employee so designated by the FTC to Defendants’ counsel, beginning 15 days after
entry of this Order and continuing every 60 days thereafter until Defendants’
obligations under this Section are concluded.
E.
Defendants shall maintain all financial institution records related to the refund
payments required by this Section, including, but not limited to, bank statements
and images of cashed checks. Such records shall be sent via email to an FTC
employee so designated by the FTC to Defendants’ counsel, beginning 15 days
after entry of this Order and continuing every 60 days thereafter until Defendants’
obligations under this Section are concluded.
F.
Defendants shall be responsible for ensuring that the account on which checks are
drawn has sufficient funds. If any check issued by Defendants is returned to the
consumer’s financial institution as having been drawn on insufficient funds,
Defendants, upon receipt of written documentation regarding the fee incurred by
the consumer, shall reimburse such fee (along with the original refund amount)
within 5 days.
G.
Defendants shall bear all costs associated with refunding consumers and reporting
redress efforts and supplying related documentation to the FTC, and shall not
deduct any costs from consumers’ refund payments. Such costs include, but are
not limited to, postage, skiptracing or other public records searches, financial
institution fees, and Defendants’ attorneys’ fees.
H.
Defendants’ redress obligations under this Section shall cease upon the completion
of all required payments to consumers or after 12 months, whichever occurs
sooner. If after 12 months Defendants have not made all redress payments as
required by this Section, Defendants shall remit the unpaid balance to the
Commission within 10 days.
I.
Any funds paid to the FTC pursuant to Section III.H of this Order shall be
deposited into a fund administered by the FTC or its agents to be used for other
equitable relief (including consumer information remedies) as the FTC determines
to be reasonably related to Defendants’ practices alleged in the Complaint. Any
funds not used for such equitable relief shall be deposited to the United States
Treasury as equitable disgorgement. Defendants shall have no right to challenge
the FTC’s choice of remedies under this Section.
J.
Defendants relinquish all dominion, control, and title to the funds paid to the
fullest extent permitted by law. Defendants shall make no claim to or demand for
return of the funds, directly or indirectly, through counsel or otherwise.
K.
Defendants shall use information regarding consumers in the Portfolio solely for
administering redress in accord with this Section and not for any other purpose.
Without limiting the foregoing, Defendants shall not (i) sell or transfer any
information regarding any consumer in the Portfolio, (ii) attempt to collect any
debt from any consumer in the Portfolio, or (iii) offer or sell any product or service
to any consumer in the Portfolio. Upon written request of the FTC after
Defendants’ obligations under this Section cease, Defendants shall destroy all
information related to consumers in the Portfolio, in all forms in Defendants’
possession, custody or control.
L.
The judgment entered pursuant to this Section is equitable monetary relief, solely
remedial in nature, and not a fine, penalty, punitive assessment or forfeiture.
ORDER ACKNOWLEDGMENTS
IV.
IT IS FURTHER ORDERED that the Defendants obtain acknowledgments of receipt
of this Order:
A.
Each Defendant, within 15 days of entry of this Order, must submit to the FTC an
acknowledgment of receipt of this Order sworn under penalty of perjury.
B.
For 2 years after entry of this Order, the Individual Defendant for any business
that he, individually or collectively with any other Defendant, is the majority
owner or directly or indirectly controls, and the Corporate Defendants, must
deliver a copy of this Order to: (1) all principals, officers, directors, and LLC
managers and members; (2) all employees, agents, and representatives who
participate in conduct related to the subject matter of the Order; and (3) any
business entity resulting from any change in structure as set forth in the Section
titled Compliance Reporting. Delivery must occur within 7 days of entry of this
Order for current personnel. To all others, delivery must occur before they assume
their responsibilities.
C.
From each individual or entity to which a Defendant delivered a copy of this
Order, that Defendant must obtain, within 30 days, a signed and dated
acknowledgment of receipt of this Order.
COMPLIANCE REPORTING
V.
IT IS FURTHER ORDERED that the Defendants make timely submissions to the FTC:
A.
One year after entry of this Order, each Defendant must submit a compliance
report, sworn under penalty of perjury.
1.
Each Defendant must: (a) identify the primary physical, postal, and email
addresses and telephone number, as designated points of contact, which
representatives of the FTC may use to communicate with such Defendant;
identify all of that Defendant’s businesses by all of their names, telephone
numbers, and physical, postal, email, and Internet addresses; (c) describe
the activities of each business, including the products and services offered,
the means of advertising, marketing, and sales, and the involvement of any
other Defendant (which the Individual Defendant must describe if he
knows or should know due to his own involvement); (d) describe in detail
whether and how that Defendant is in compliance with each Section of this
Order; and (e) provide a copy of each Order Acknowledgment obtained
pursuant to this Order, unless previously submitted to the FTC;
2.
Additionally, the Individual Defendant must: (a) identify all telephone
numbers and physical, postal, email, and Internet addresses, including all
residences; (b) identify all business activities, including any business for
which the Individual Defendant performs services whether as an employee
or otherwise and any entity in which the Individual Defendant has any
ownership interest; and (c) describe in detail the Individual Defendant’s
involvement in each such business, including title, role, responsibilities,
participation, authority, control, and any ownership.
B.
For 2 years following entry of this Order, each Defendant must submit a
compliance notice, sworn under penalty of perjury, within 30 days of any change
in the following:
1.
Each Defendant must report any change in: (a) any designated point of
contact; or (b) the structure of any Corporate Defendant or any entity that
such Defendant has any ownership interest in or directly or indirectly
controls that may affect compliance obligations arising under this Order,
including: creation, merger, sale, or dissolution of the entity or any
subsidiary, parent, or affiliate that engages in any acts or practices subject
to this Order.
2.
Additionally, the Individual Defendant must report any change in: (a)
name, including aliases or fictitious name, or residence address; or (b) title
or role in any business activity, including any business for which the
Individual Defendant performs services whether as an employee or
otherwise and any entity in which the Individual Defendant has any
ownership interest, and identify its name, physical address, and Internet
address, if any.
C.
Each Defendant must submit to the FTC notice of the filing of any bankruptcy
petition, insolvency proceeding, or any similar proceeding by or against such
Defendant within 30 days of its filing.
D.
Any submission to the FTC required by this Order to be sworn under penalty of
perjury must be true and accurate and comply with 28 U.S.C. § 1746, such as by
concluding: “I declare under penalty of perjury under the laws of the United States
of America that the foregoing is true and correct. Executed on: “______” and
supplying the date, signatory’s full name, title (if applicable), and signature.
E.
Unless otherwise directed by a FTC representative in writing, all submissions to
the FTC pursuant to this Order must be emailed to DEbrief@ftc.gov or sent by
overnight courier (not the U.S. Postal Service) to: Associate Director for
Enforcement, Bureau of Consumer Protection, Federal Trade Commission, 600
Pennsylvania Avenue NW, Washington, DC 20580. The subject line must begin:
FTC v. ACDI Group, LLC, et al., Matter Number X170042.
RECORDKEEPING
VI.
IT IS FURTHER ORDERED that each Defendant must create records for 5 years
following entry of this Order, and retain each such record for 5 years. Specifically, the Corporate
Defendants and the Individual Defendant for any business in which the Individual Defendant,
individually or collectively with any other Defendant, is a majority owner or directly or indirectly
controls, must maintain the following records:
A.
Consumer debt portfolios, purchased, sold, or brokered by Defendants, and any
other records pertaining to consumers from whom Defendants attempt to collect
debts;
B.
Records showing debt collection payments received from consumers;
C.
Personnel records showing, for each person providing services, whether as an
employee or otherwise, that person’s: name, addresses, and telephone numbers;
job title or position; dates of service; and, if applicable, the reason for termination;
D.
Complaints and refund requests, whether received directly or indirectly, such as
through a third party, and any response; and
E.
All records necessary to demonstrate full compliance with each provision of this
Order, including all submissions to the FTC.
COMPLIANCE MONITORING
VII.
IT IS FURTHER ORDERED that, for the purpose of monitoring the Defendants’
compliance with this Order, including any failure to provide an accounting of or transfer
any assets as required by this Order:
A.
Within 30 days of receipt of a written request from a representative of the FTC,
each Defendant must: submit additional compliance reports or other requested
information, which must be sworn under penalty of perjury; appear for
depositions; and produce documents, for inspection and copying.
B.
For matters concerning this Order, the FTC is authorized to communicate directly
with each Defendant. The Defendants must permit representatives of the FTC to
interview any employee or other person affiliated with any Defendant who has
agreed to such an interview. The person interviewed may have counsel present.
C.
The FTC may use all other lawful means, including posing, through its
representatives, as consumers, suppliers, or other individuals or entities, to the
Defendants or any individual or entity affiliated with the Defendants, without the
necessity of identification or prior notice. Nothing in this Order limits the FTC’s
lawful use of compulsory process, pursuant to Sections 9 and 20 of the FTC Act,
15 U.S.C. §§ 49, 57b-1.
D.
Upon written request from a representative of the FTC, any consumer reporting
agency must furnish consumer reports concerning the Individual Defendant,
pursuant to Section 604(1) of the Fair Credit Reporting Act, 15 U.S.C.
§1681b(a)(1).
ENTRY OF JUDGMENT
VIII. IT IS FURTHER ORDERED that there is no just reason for delay of entry of this judgment,
and that, pursuant to Federal Rule of Civil Procedure 54(b), the Clerk immediately shall enter this
Order as a final civil judgment as to Defendants Anthony Swatsworth, ACDI Group, LLC and
Solutions to Portfolios, LLC, d/b/a STP Management Group.
JURISDICTION
IX. IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for all
purposes.
SO ORDERED.
Signed: December 2, 2019
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