Despite Attention, Payday Scammers Keep Calling

For years now, we at have written story after story warning people about fake payday loan debt collectors. This February the Federal Trade Commission won a court order to close an operation that allegedly stole $5 million from American consumers using intimidation and threatening phone calls to collect on phantom payday loan debts, most of which never existed.

And just last week ABC News did an expose of the scam, detailing how criminals, mostly working from call centers in India, pose as representatives of debt collection firms. Many of the payments were processed by a California-based company run by Kirit-Patel, an Indian-American man who served as the front man for one of the schemes, the FTC alleges.

“I would say that all roads of this scam, or many of the roads of this scam, lead back to Mr. Patel,” Jon Leibowitz, chairman of the FTC, told ABC News.

But the scam appears to be a multi-headed hydra. According to readers, the harassing phone calls from fake debt collectors continue unabated, months after the FTC won its effort to shut down one of the criminal organizations behind the scheme.

“Today I got a call from a private investigator named John McCaffrey,” a reader using the screen name “Kristen” told us in a comment to the blog on July 5. “He stated that I was to appear at my local county courthouse to take care of the matter. What was disturbing is that he also called my mother’s phone number and my sister-in-laws phone number, leaving the same message.”

There is absolutely no doubt that this call from “John McCaffery” is a scam. The most obvious red flag is that debt collectors cannot order anyone to appear at county courthouses. Only courts, police and sheriff’s departments have the power to inform citizens when they must appear in court.

Nevertheless, this type of threat is a common tactic used by fake payday loan collection scammers to place their victims under a tight deadline, and make it seem as though serious legal problems could ensue if the victims fail to make immediate payments.

“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,” according to the FTC.

A reader using the screen name “Hank” wrote on April 19 to tell us that one scammer told him he owed $2,097 on an unpaid payday loan “and that if I did not take care of this that there would be a sheriff at my door to take me to jail,” Hank said.

To avoid arrest and jail, the scammer demanded that Hank reveal his credit card number, so that the “debt collectors” could take payments in $500 increments until the entire debt was paid.

Plain and simple: This is a scam, says Gerri Detweiler,’s consumer credit expert.

“If you are being sued for a debt, you may be served. But they aren’t going to just ‘haul you off to jail’ simply because you can’t pay a debt,” Detweiler told Hank. “My suggestion? Ask for written verification of the debt, which you are entitled to by law. They won’t likely send it.”

Here are some tips for how to recognize a fake debt collector who calls you on the phone:

  • According to the FTC and many readers, most of the fake debt collectors have strong Indian accents. Nevertheless, many of them pretend to have classically American-sounding names like “John Robinson” or “Mike Smith.”
  • The callers often claim to represent some vaguely official-sounding branch of the American justice system. For example, a writer for received a call from someone who said he was from the “Brooklyn County Court,” which does not exist. Others have received calls purportedly from companies with names like “American Debt Services.”
  • Time pressure. Fake debt collectors often try to create the impression that these “debts” must be paid immediately, over the phone, to avoid arrest or jail.
  • Do you actually owe money on a payday loan? Oftentimes, debt collection scammers call about payday loans that were never actually received. In many cases it appears that the victims did investigate an online payday loan, often handing over personal information including their names and phone numbers. In other cases, victims say they did receive a payday loan, but that it’s already been paid.

If the phone calls you receive fit any of the above criteria, they are probably coming from scammers. Here are some tips on how to handle such schemes:

  • Immediately hang up on them. If you receive a phone call that meets any of the above criteria, hang up. If they call back, tell them never to call you again, and then hang up. By showing that you cannot be intimidated, the scammers are likely to move on to anther potential victim.
  • Do your research. “Check out the specific company making the calls,” Detweiler says. “A simple web search can often identify a company that is a fake. Firms often use meaningless names like ‘fraud investigation center’ to sound official.”
  • Ask for written documentation to confirm that the debt exists. If the caller balks at sending you documentation, he or she is a scammer. Period.
  • Never give out personal information. “Do not give your credit or debit card number over the phone to a collector that calls you out of the blue,” Detweiler says. “If you determine the debt is legitimate, consider paying with a cashier’s check or prepaid card.”
  • Most important: Do not be intimidated. No debt collector has the power to have you arrested. No collector has the authority to call your boss or your friends and tell them about your (potentially false) debts. And no collector can dock your pay or take money from any of your accounts without first providing written documentation that the debt actually exists. In fact, scammers have no power at all, except to annoy you. Remember this, and you avoid being intimidated by them.

Image: Memi Beltrame receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them. Compensation is not a factor in the substantive evaluation of any product.

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