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For years now, we at Credit.com 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 Credit.com 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 Credit.com 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 Credit.com 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, Credit.com’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:
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:
Image: Memi Beltrame
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