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FTC, State, and Federal Law Enforcement Partners Announce Nationwide Crackdown on Phantom and Abusive Debt Collection-‘Operation Corrupt Collector’ targets debt collectors trying to collect on non-existent debts, using illegal scare tactics

Tue, 09/29/2020

The South Carolina Department of Consumer Affairs (SCDCA), along with the Federal Trade Commission and more than 50 federal and state law enforcement partners, today announced a nationwide law enforcement and outreach initiative to protect consumers from phantom debt collection and abusive and threatening debt collection practices.

The initiative, called Operation Corrupt Collector, includes enforcement actions brought by the FTC, three federal partners, and partners from 16 different states against debt collectors engaged in these illegal practices.

Handling debt collection calls“For many years, we’ve been working with our law enforcement partners to crack down on illegal and abusive debt collectors,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “At a time when many are under financial stress, our coordinated actions today show that we’re continuing the fight against collectors who threaten people and try to collect debts they don’t owe.”

“DCA is appreciative of the partnerships formed with our fellow state and federal regulators, especially in the debt collection area where we see an above average number of complaints and unscrupulous businesses profiting from South Carolinians,” Carri Grube Lybarker, SCDCA Administrator, said.

The operation includes five cases filed by the FTC, two cases filed by the Consumer Financial Protection Bureau and three criminal cases brought by the U.S. Department of Justice and U.S. Postal Inspection Service. States reporting actions as part of the operation include Arizona, California, Colorado, Connecticut, Florida, Idaho, Illinois, Indiana, Massachusetts, New Mexico, North Carolina, North Dakota, New York, Ohio, South Carolina, and Washington.

In addition to law enforcement actions, state and local consumer protection agencies across the country are joining the FTC in rolling out new information to help consumers know their rights when it comes to debt collection and what steps to take if they receive a call trying to collect on a debt that they do not recognize. The FTC has also created a new online dashboard with information about reports received from consumers on debts not owed and abusive and threatening collection practices. So far in 2020, the FTC’s Consumer Sentinel Network has received more than 85,000 reports from consumers related to debt collection, and nearly 45 percent of those were related to debts the consumer did not owe or abusive and threatening practices.

SCDCA is involved in two actions with the Consumer Financial Protection Bureau, one including the Arkansas Attorney General. The first action is against LFO, Katharine Snyder and Performance Arbitrage Company, Inc. (PAC) for allegedly brokering high-interest credit contracts in violation of federal and South Carolina law. For a full press release on the LFO, Snyder and PAC action, click here. The second action is against Kern-Fuller, Sutter and ULG for allegedly underwriting, approving, processing payment and collecting debt from high-interest credit contracts in violation of federal and South Carolina law. For a full press release on the Kern-Fuller, Sutter and ULG action, click here.

SCDCA has created a free flyer for download to help consumers know how to deal with debt collectors and what debt collectors cannot do. For more education on dealing with debt, click here.

About the FTC

The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about consumer topics and file a consumer complaint online or by calling 1-877-FTC-HELP (382-4357). Like the FTC on Facebook, follow us on Twitter, read our blogs, and subscribe to press releases for the latest FTC news and resources.


The South Carolina Department of Consumer Affairs aims to protect consumers from inequities in the marketplace through advocacy, complaint mediation, enforcement and education. To file a complaint or get information on consumer issues, visit or call toll-free,1 (800) 922-1594.

Consumer Response Center

Jay Mayfield
FTC Office of Public Affairs