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Federal Trade Commission v. Swatsworth

United States District Court, W.D. North Carolina, Charlotte Division

December 2, 2019

FEDERAL TRADE COMMISSION, Plaintiff,
v.
ANTHONY SWATSWORTH, ACDI GROUP, LLC, and SOLUTIONS TO PORTFOLIOS, LLC, Defendants.

          ORDER FOR PERMANENT INJUNCTION AND JUDGMENT

          GRAHAM C. MULLEN UNITED STATES DISTRICT JUDGE.

         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 ...


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