A married couple in Phoenix, Arizona are being sued by the state’s Attorney General in a consumer fraud case where they are accused of defrauding potentially thousands of people out of more than $1.6 million.
Attorney General Mark Brnovich said Mark Anthony Smith and Deborah Ann Butler of impersonating authorities and using fake phone numbers that appeared to be from courthouses, jails and sheriff’s offices for debts they weren’t authorized to recover.
Smith and Butler threatened to freeze bank accounts, suspend driver’s licenses, garnish wages, withdraw tax returns for thousands of unpaid debts, according to a criminal complaint. They were also accused of masking their real phone numbers with those of courthouses and sheriff’s offices more than 65,800 times to convince people the calls were legitimate.
Smith and Butler operated under the corporate names CMS Financial Group, John Lee Group & Associates and TD Financial Solutions Group AZ.
The lawsuit follows an investigation by the Attorney General, the Federal Trade Commission and more than 50 other federal and state law enforcement agencies. The victims of the scams had filed complaints with the FTC, the Better Business Bureau and the Consumer Financial Protection Bureau.
The lawsuit asks the defendants to pay restitution of $1.6 million to the victims and $31.7 million in fines. Smith and Butler would also face a lifetime ban from working in debt collection.
There have been more than 86,000 complaints filed in 2020 related to debt collection, according to the FTC. Approximately 45% of these complaints relate to abusive and threatening debt collection practices and appeals regarding unpaid debts.
In September, the FTC announced Operation Corrupt Collector, a nationwide crackdown on debt collection scams. Currently, the effort involves more than 50 FTC actions and state cases filed by law enforcement in 16 states, including Arizona, California, Massachusetts, North Carolina and New York.
There are several red flags to identify debt collection scams. Licensed debt collectors are not permitted to threaten imprisonment or impersonate a government official, according to the FTC. They are also not allowed to harass people with repeated phone calls. Collection agents must verify the debt by providing information such as the name of the original creditor and the total amount owed.