FTC Scores Preliminary Halt To Bill Collector Collecting 'Phony' Debts As Court Order Stops Outfit That Already Pocketed $5M+ From Alleged Victims

From the Federal Trade Commission:

• At the request of the Federal Trade Commission, a U.S. district court has halted an operation that the FTC alleges collected phantom payday loan “debts” that consumers did not owe. Consumers received millions of collection calls from India, and that since January 2010 the operation took in more than $5 million from victims, according to the FTC.



• In tough economic times, many consumers turn to high-interest, short-term payday loans between paychecks. The FTC alleges that information submitted by consumers who applied online for these loans found its way into the hands of the defendants.



• Often pretending to be law enforcement or other government authorities, the callers working with the defendants would falsely threaten to immediately arrest and jail consumers if they did not agree to make a payment on a delinquent payday loan, the FTC’s court papers stated.



• Claiming to be law enforcement, such as a local police department, the “Federal Department of Crime and Prevention,” or simply a “federal investigator,” the callers typically demanded more than $300, and sometimes as much as $2,000.



• At other times, the callers said they were filing a large lawsuit against the consumer because of the delinquent payday loan or would have the consumer fired from his or her job, according to the FTC.



• But the consumers did not owe money to defendants – either the payday loan debts did not exist or the defendants had no authority to collect them because they are owed to someone else, according to the FTC.



• The court order stops the illegal conduct and freezes the operation’s assets while the FTC moves forward with the case.

For the FTC press release, and links to related court documents, see Court Halts Alleged Fake Debt Collector Calls from India, Grants FTC Request to Stop Defendants Who Often Posed as Law Enforcement.

For more on bill collectors attempting to collect on fake debts, see FTC Consumer Alert: Who's Calling? That Debt Collector Could Be a Fake.