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Debt collection scam nets millions

On Behalf of | Sep 20, 2013 | Creditors' Rights

When a person falls into debt, it sometimes seems like one is being hounded by debt collection calls. Often, when a person owes debt to several different entities, the calls multiply, and it can be difficult to keep track of how much one owes, and to whom. It’s a frustrating and stressful situation, one that a group of sophisticated scammers recently took advantage of.

The Federal Trade Commission recently fined two debt collection companies more than $25 million for violations of debt collection practices in the United States. The two companies, which were based in Florida, used call centers in India to prey upon consumers nationwide.

The scammers started by contacting online payday loan companies, somehow obtaining client information from them. That information was then sent to a call center in India, where callers contacted the payday loan company’s current and former clients, demanding payments from them. None of the people contacted owed the Florida company any money whatsoever. Many were not in debt at all.

Still, many people paid, often out of confusion or fear. The callers used a variety of illegal tactics to extract payments from their victims, including lies, threats and abuse. Once the victim agreed to pay, the debt collection process was sent to the second Florida company, who processed approximately $5 million during a two-year span.

In 2012, a court, at the insistence of the FTC, shut both operations down. Now, the FTC is seeking restitution in the form of the massive $25 million judgment against the companies involved in the scam.

The sophistication and worldwide scope of the scam shows just how innovative and powerful telemarketing scammers are becoming. For this reason, it is important that consumers understand legal debt collection practices, so they are able to more easily identify a scam when confronted with one.

Source: The New York Daily News, “US stops debt collection scams through Indian call centres” Arun Kumar, Sep. 11, 2013

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