FTC Bans Collector For Knowingly Collecting On Invalid Loans

The Federal Trade Commission has banned a debt collector, Kelly S. Brace, as part of a final order entered into against him and the companies he owned – Braclaire Management, Clear Credit Services, Clear Credit Solutions, Delaware Solutions, Credit Clear Solutions, and Solidus Group – for attempting to collect on debts that did not exist.

The case, which was brought by the FTC and Eric Schneiderman, the attorney general of New York last November, was part of the initial push of Operation Collection Protection, a joint federal and state initiative aimed at prosecuting the bad actors of the collections industry. Brace was one of four separate cases highlighted by the FTC as its initial wave of attacks against unscrupulous collectors.

Along with being banned from the debt collection industry for life, Brace must also pay more than $151,000 to the FTC as part of an $18 million deferred judgment. Brace’s ex-wife, Joelle Leclaire, must repay $44,700 as part of a deferred $418,000 judgment. The full amounts become due if either defendant is found to have misrepresented their financial conditions.

Brace and his firms purchased defaulted payday loans that were supposedly owed to a company and continued to try and collect on the loans, even after the payday lender contacted the defendants and told them that the loans were not valid. The defendants would call individuals and threaten to sue them or have them arrested if a payment was not made.

A copy of the final order can be downloaded here.