“Phantom Debt” gets companies in trouble with Feds

via “Phantom Debt” gets companies in trouble with Feds on clarionledger.com on 7/9/2014.

Heavy-handed and illegal tactics to collect “phantom debts” have landed six companies in hot water with federal investigators recently. The latest case, announced today, shut down a Georgia-based company after employees allegedly tried to collect $3.5 million from consumers who didn’t owe the debt.

Norcross, Georgia resident John Williams and two companies he controls used “a variety of false threats to bully consumers nationwide into paying supposed payday loan debts,” the Federal Trade Commission announced today in anews release. A U.S. district court ordered the companies’ assets be frozen, as they could possibly be used later to reimburse victims.

Williams and his companies Williams, Scott & Associates, LLC; and WSA, LLC falsely claimed to be affiliated with federal and state agents, investigators, members of a government fraud task force, and other law enforcement agencies, and pretended to be a law firm, according to the FTC complaint. The defendants also allegedly told consumers their drivers’ licenses were going to be revoked, used profanity and abusive language and told victims that they were criminals facing imminent arrest and imprisonment.

The FTC alleges that Williams’ companies targeted consumers who had at one time inquired online about payday loans, but their contact information was shared without their consent.

“Many consumers in this case were victimized twice,” said Jessica Rich, Director of the Federal Trade Commission’s Bureau of Consumer Protection. “First when they inquired about payday loans online and their personal information was not properly safeguarded, and later, when they were harassed and intimidated by these defendants, to whom they didn’t owe any money.”

This is the FTC’s sixth recent case charging “phantom debt” scams with law violations. Other cases include American Credit Crunchers, LLC, Broadway Global Master Inc., Pro Credit Group, Vantage Funding, also known as Caprice Marketing, and Pinnacle Payment Services, LLC.

Consumers are at a distinct disadvantage when it comes to bill collectors. You do have rights, some of which are contained in the Fair Debt Collection Practices Act (FDCPA). [link to http://www.federalreserve.gov/boarddocs/supmanual/cch/fairdebt.pdf%5D The law covers who can call you, what they can say — and not say — when they can call you, and why. It’s a good idea to familiarize yourself with your rights.

If you are being wrongly targeted by collectors, remember a couple of things:

Ask for the caller’s name, company, street address, and telephone number, and tell him or her that you refuse to discuss any debt until you get a written “validation notice.” The notice must include the amount of the debt, the name of the creditor you owe, and your rights under the federal FDCPA.

If he or she refuses, is abusive or won’t listen, there’s a good chance it’s a scam. Don’t provide any information over the phone, because it could open you up to identity theft. And paying could just make it worse. “Paying a fake debt collector won’t always make them go away: They may make up another debt to try to get more money from you,” advises the FTC.

Bottom line: demand to see someone in writing before you work with a debt collector.

Collecting debts is a necessary business practice, and we’re all responsible for debt we incur. But with increasingly shady practices of some collection companies, we have to protect ourselves more than ever.

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