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This tale of phantoms doesn’t involve crashing chandeliers and operatic crescendos.  But according to a lawsuit filed by the FTC, the results were just as dramatic for consumers mistreated by debt collectors who used deceptive and threatening tactics to collect on “phantom” payday loans — bogus debts people didn’t really owe.  The complaint charges Atlanta- and Cleveland-based Pinnacle Payment Services, LLC and a chorus of corporate officers and affiliated outfits with violations of the FTC Act and the Fair Debt Collection Practices Act.

Here’s how the FTC says the defendants set the stage.  Consumers would get a phone message or robocall that said something like this:

This is the Civil Investigations Unit.  We are contacting you in regards to a complaint being filed against you, pursuant to claim and affidavit number D00D-2932, where you have been named a respondent in a court action and must appear.  There is a contact number on file which you must call, [phone number].  Please forward this information to your attorney in that the order to show cause contains a restraining order.  You or your attorney will have 24 to 48 hours to oppose this matter.  The claim and affidavit number once again is D00D-2932.  Call [phone number].  Thank you and good luck.

According to the complaint, consumers who received the alarming messages either didn’t owe any money — or didn’t owe money to Pinnacle.  But threatened with legal action, wage garnishment, or even arrest, people paid millions to Pinnacle just to get them off their backs.

The FTC says the defendants masked their identity with a host of phony names to suggest an affiliation with a law firm or law enforcement agency.  Allied Litigation Group, United Judgment & Appeals, Dockets Liens & Seizures, and United Judgment Center were among their cast of characters.

Adding insult to injury, the FTC says the defendants often made their phony threats in violation of the FDCPA.  The complaint charges that they called at illegal hours, hounded people at work, and disclosed the non-existent “debts” to family and employers.  The companies’ practices generated close to 3,000 complaints to the FTC’s Consumer Sentinel.

A federal judge in Atlanta has entered a preliminary order freezing the defendants’ assets and appointing a receiver.

The message for companies considering a similar storyline:  That’s not "The Music of the Night" you hear.  It’s a loud-and-clear warning from the FTC that using illegal methods to collect debts — real or phantom — is likely to result in dramatic consequences.