Debt Collectors Claimed to Be U.S. Marshals in $4.1M Scheme, FBI Alleges

Bullying and using illegal threats to scare consumers into paying debts is nothing new. Rogue collection agencies and scammers have been doing it for years, some very successfully. How much money can they make? An announcement today revealed that one company has netted more than $4.1 million from 6,000 alleged victims across the country using potentially illegal tactics to pressure them into paying.

The U.S Attorney and the FBI have announced charges against Williams, Scott & Associates, (“WSA”), a debt collection company based in Norcross, Ga., its owner John Todd Williams and six employees. According to the allegations contained in the complaint unsealed today in Manhattan federal court, the threats these companies used included:

Assuming false identities, such as claiming they were “detectives,” or “investigators,” or falsely claiming they were affiliated with the Department of Justice, the U.S. Marshals Service, or even with nonexistent government agencies such as the “Federal Government Task Force” and the “DOJ Task Force.”
Falsely accusing consumers of committing purported crimes such as “check fraud” or “depository check fraud,” and warning them that if they didn’t pay WSA immediately, a warrant would be issued for their arrest.

Similar threats are often made by overseas debt collection scammers. What’s unique here is that these collectors are accused of brazenly making these accusations even though they were based in the U.S., and not beyond the reach of law enforcement. The federal Fair Debt Collection Practices Act gives consumers specific protections against unfair debt collection practices, and makes false threats illegal. (Here’s a crash course in how to handle collection calls.)

When the FBI searched WSA’s offices in May 2014, they claim they found scripts for calls made by employees that included numerous misrepresentations. For example:

This is investigator _____ I calling [sic] in reference to a complaint that has been filed through the national check fraud center were [sic] that stated that they have sent correspondents [sic] to ________ as well _______ and you have not responsed [sic] which has made your statue [sic] of limitations for your civil legal rights exhaust. That means that you are being pursued for one count of theft by deception and can be forwarded over to the local county for proceedings to start.

Another threat they used was to tell consumers they were being investigated for “theft by deception,” a crime that is not typically associated with consumers who are simply unable to pay their bills.

You Have Rights

If you get a call from a debt collector, understand your debt collection rights. Insist they mail written notice of the debt — which they are required to do under the FDCPA. In addition, it is essential that consumers get a free credit report to find out if a collection account appears on their credit reports. A collection account can drop a consumer’s credit score significantly, so checking your credit scores regularly can also alert you to unexpected collections on your credit reports. (You can get two of your credit scores for free on Credit.com.)

In addition, the FTC suggests who wish to report a crime by another debt collector to contact the FTC at 1-877-FTC-HELP.