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Fake collectors scam vulnerable consumers out of millions

On Behalf of | Feb 23, 2012 | Credit Card Debt, Firm News

A fake payday loan operation has been halted by a U.S. District Court action but not before vulnerable consumers were illegally contacted by scam collection efforts using telephone callers based in India. It is estimated that those consumers paid over $5 million to the alleged perpetrators of the scam since January 2010.

The California-based collection company owner has been charged with violation of the FTC Act and Fair Debt Collection Practices Act. The complaint alleges that the owner gathered information from consumers when they applied for online payday loans. Social Security and bank account numbers were used, along with fake statements, threats and harassment by the collection agents to try to collect debts that never existed or that the company was not authorized to collect.

Many consumers turn to payday loans in an effort to avoid late payments, foreclosure, bankruptcy and other dire financial circumstances. Reliance upon these short-term high interest loans can lead to an even worse financial situation when borrowers are unable to make timely repayments.

When consumers received these fake collection calls, many were scared into making payments because callers threatened them with arrest and jail consequences. Consumers received various types of threats, including loss of their jobs or lawsuits, and they were continually harassed. Some callers also falsely claimed to be law enforcement authorities with the local or federal police departments.

This move by the court freezes the scam company’s assets and stops all illegal conduct during the course of this case. Consumers are reminded by the FTC that they should not become pressured into paying debts they do not owe or remember, and that a legitimate collection agent will have to provide written information about any debt and offer protective consumer instructions.

If you are being harassed by any collection agency, are receiving threatening calls, or otherwise doubt the credibility of a collection company, contact a bankruptcy attorney to determine if consumer protection laws are being violated. You have a right against harassment and could enjoy immediate cessation of illegal collection activities by working with aggressive representation.


Collections & Credit Risk: “Court Halts Fake Collector Calls From India,” Feb. 21, 2012

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