Federal and state authorities are cracking down on a multi-million dollar debt collection scheme that profited at least $3.8 million from consumers who were tricked into paying off debts they never owed in the first place.
The Federal Trade Commission has taken action, setting up “Operation Collection Protection,” an ongoing effort to combat phony debt collection schemes, which has become the number one consumer complaint at the FTC.
Six companies and three individuals are being sued who used a variety of business names including Stark Law, Stark Recovery and Capital Harris Miller & Associates in what the complaint alleges was actually part of a “telephone boiler room operation” that harassed consumers nationwide for money they did not owe.
Victims had previously entered personal information into online loan websites. Authorities believe many of these sites were fake and designed to gather consumers’ personal information. Callers allegedly told the consumers they had outstanding debts and threatened them with lawsuits or said that debt collectors would contact their employers or relatives.
The debt collectors detailed personal information over the phone, including consumers’ social security numbers, full names, addresses and employment information to convince consumers of their legitimacy.
Phantom debt collection is a growing problem. Last year, the FTC received nearly 900,000 debt collection complaints. Debt collection complaints even surpassed identity theft, which had been the number one issue for consumers for the past 14 years.
You have rights when it comes to debt collection. Remember these tips:
- Be wary of anyone who calls out of the blue attempting to collect payment on a debt.
- Ask the collector to mail you written details about the debt owed.
- Make sure you document the debt collector’s name, address and company name and ask for the original creditor’s name.
- Know that you have the right to dispute any debt you feel you do not owe.
- “Phantom debts” will not appear on your credit report, so to confirm whether you owe, download your free annual credit report from each of the three credit bureaus at annualcreditreport.com.
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