For a while now, we’ve been getting complaints from Credit.com readers about fake payday loan debt collectors. So I wasn’t surprised when I read the announcement this week by Illinois Attorney General Lisa Madigan warning Illinois residents to “be on the alert for scam artists posing as collectors of payday loan debt. The scammers call consumers and threaten them with legal action unless the victims authorize payments from their bank accounts.” Her office has received numerous complaints.
These are not your normal debt collection calls. In many cases, these collectors are very aggressive. Here are some of the threats reported on our forums:
“…we would have to appear in court at 11:00am tomorrow morning, we would be charged with internet fraud, would be put in jail, could be sentenced to 4 months in prison, etc.”
“…said that if I didn’t pay $1,095.87, the police was going to come to my house and arrest me and take me to jail.”
“…wont give me company name and he tried to cuss me out…”
Just to be clear, these are not collectors trying to collect legitimate debts. Most of the complaints on our forums, and to the IL AG involve consumers who either never took out a payday loan, or who may have initiated one but never actually secured the loan. In some cases, the “collector” has detailed information about the victim – such as name, address and Social Security number – which makes the debt appear to be real.
What to Do If You Get a Suspected Scam Call
- Ask the collector for the name and address of the collection agency for which he or she works. Then ask him to send you written information about the debt. Any legitimate debt collection agency will do this because it’s required under the federal Fair Debt Collection Practices Act.
- If the caller won’t give you this information, hang up. If a phone number is available through caller ID, report the call on our forums and to your state attorney general and the FTC.
- Don’t let one of these companies scare you into making payments if you’re not sure you owe the debt. In most cases, collectors must first take you to court and get a judgment before they can go after your wages or property. (If you live in Minnesota, though, read this warning.)
By the way, you can’t be arrested simply because you can’t afford to pay a debt. (Warning, though, there are cases where consumers are jailed in connection with debts because they failed to appear in court after a summons was issued.)
The Illinois Attorney General’s office says the bogus debt collectors they’ve heard about use a variety of names, including: Morgan & Associates, Federal Bureau of Investigators, DNR Recovery, DNI Recovery, Legal Accounts Association, Department of Law and Enforcement, CashNet USA, America Legal Services, Quick Cash, and ACS. If you hear from any of those companies, be sure to report them immediately to your state Attorney General’s office and the Federal Trade Commission.
If you’re concerned about how your debt could be impacting your credit, you can check your three credit reports for free once a year. If you’d like to monitor your credit more regularly, Credit.com’s free Credit Report Card provides you with an easy to understand breakdown of the information in your credit report using letter grades, along with two free credit scores that are updated monthly.