On January 9, the Federal Trade Commission (FTC) issued a press release announcing that it filed a lawsuit against a Kansas man and affiliated companies for allegedly selling portfolios of fake payday loan debts to debt collectors. Debt buyers and debt collection agencies subsequently used the information to pursue payment from consumers for those fake debts.

According to the FTC’s complaint , Joel Jerome Tucker, SQ Capital LLC, JT Holdings Inc., and HPD LLC sold lists of counterfeit debt portfolios that purport to identify consumers who have defaulted on payday loans. The phony debt portfolios list consumer names and contact information along with social security and financial account numbers. The lists indicated that the consumers had defaulted on loans supposedly originated by a fictitious lender, “Castle Peak,” or by an online lender known as “500FastCash.”

The FTC’s lawsuit, which it filed in the US District Court for the District of Kansas, alleges that these actions violate the Federal Trade Commission Act’s prohibition on unfair or deceptive acts or practices.

The court has already granted FTC’s request for a preliminary injunction that prohibits the defendants from selling phantom payday loan debt. The FTC’s press release states that they also intend to “permanently end the unlawful practice.”