Managing Debt

FTC Cracks Down on Payday Loan Debt Collector

Comments 36 Comments

At Credit.com, we’ve heard from consumers across the country who have been harassed by phony debt collectors who threaten to have them arrested for debts they may not even owe. While the threats are often blatantly illegal, there hasn’t been a lot that American regulators or law enforcement agencies could do to stop most of these scammers. That’s because they are based overseas.

But now at least one firm won’t be making any more collection calls, thanks to efforts by the Federal Trade Commission. Villa Park, California-based American Credit Crunchers, LLC, an affiliated company called Ebeeze, LLC, and the companies’ owner, Varang K. Thaker, are charged with violating the FTC Act and the Fair Debt Collection Practices Act.

FREE TOOL:
CHECK YOUR CREDIT

Credit.com’s Credit Report Card
Check your credit bureau profile for free with this great tool. See your detailed credit evaluation, expert advice on managing your credit, and unlimited free updates every 30 days.
Get Started Here »

A U.S. district court has closed down the operation based on FTC allegations that it made calls to collect payday loan debts that didn’t exist. According to the complaint, the firm made over 5 million collection calls from India. It was a lucrative operation, netting more than $5 million from consumers, says the FTC.

[Free Credit Calculator: Use Credit.com's Credit Report Card]

According to the FTC’s court papers, the callers pretended to be law enforcement agents, or “federal investigators” and threatened to arrest and/or imprison their victims if they didn’t pay.

One of the reasons these types of schemes work so well is that they target consumers who have received, or applied for, payday loans online. The firms usually have detailed personal information about the consumers they are calling, such as Social Security numbers or bank account numbers. That information makes callers think the debt is legitimate.

But for those who are getting those calls, the FTC’s complaint lists a couple of red flags:

  • They threaten to lodge criminal charges against consumers who fail to pay these alleged debts. But the “collectors” have no intention of taking—or even the standing or authority to take—legal action against these consumers.
  • Other times, they pretend to be attorneys or to work for law firms when they do not.
  • They frequently use abusive or profane language during these telephone calls.  That’s prohibited under the Fair Debt Collection Practices Act.

[Related article: Beware of Fake Payday Loan Collection Scam]

While this is good news for consumers, the reality is there are many more firms operating the same way. This one happens to be based in California, which is why the FTC was able to act. But for the companies based entirely overseas, it’s likely business as usual. In fact, whose to say the employees who were working for this firm aren’t collecting for someone else now?

As long as this type of scam continues to make money, there will be companies operating the same way. The only way to stop it is to get consumers to stop paying bogus debts or debt collectors. Be extremely cautious if you get collection calls and the collector uses high-pressure tactics—especially for payday loans.

  • Ask for written verification of the debt. You are entitled to it by federal law. Any legitimate collection agency will send it.
  • Check out the specific company making the calls. 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.
  • Do not give your credit or debit card number over the phone to a collector that calls you out of the blue. If you determine the debt is legitimate, consider paying with a cashier’s check or prepaid card.

[Related article: The Dos and Don'ts of Paying a Debt Collector]

NOTE:  The Commission files a complaint when it has reason to believe that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law.   

Image: stallio, via Flickr.com

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

  • Pingback: Help! Bill collectors called my family | Iphone News

  • Bonnie

    I have some payday loans I can not pay. They are calling every day with threats, and they are calling my daughter every day. What can I do? I am social security disability and have a heart problem, high blood pressure and very depressed.. This is not helping me at all. Please help me

  • Daniel Smith

    Giving you information about one fraud scam center in India at pune city…….
    Don’t pay any amount, their hotline division is 877-514-6721 and their fax no is 212-202-3838 either vice verse…….

    Thanks………….

  • http://MassStreetGroup,alsoknownasAllStateLayersinCalifornia Darlene

    I have been getting threatening calls from this outfit stating if I don’t make good on the payment they will file suit against for me interstate fraud and bad checks across state lines. When I looked up their phone # (855)207-1463 on the internet, it states it is a well known number for a scam. Also when I call them they answer their phone as Progressive. I have several pay day loans outstanding. Most of the companies are willing to work with me. They call me and send me e-mails. This particular company wont even tell me who they are collecting for. They say I will never received a letter from the company they are collecting for, only from them. When speaking with the girl she let is slip that one of them was Mass Street Group that is affiliated with All State Lawyers of California. They are also calling my supervisor here at work and being very cryptic, stating I must respond or they will come to my work for serve me papers. What can I do to stop this?

  • christine Rosado

    Yesterday my mom revived a call from a man named Troy Mccoy. He said I was in a lot of trouble
    For not paying back a payday loan threatens jail time. I called back he was rude and mean said I was in trouble for check fraud. Then said I had to pay back 744 that day or else no payments allowed. Then later I called back and got one of the partners named John Nacari he was nicer, he said he wld reduce the amount he even emailed me a letter stating if I agree to pay the amount by a certain day all charges wld be dropped. I have done resarch to find more about the company but there is no info any where I have the name and adress but in the bbb they don’t exist help is this a scam I am afraid to pay and not pay for pending charges
    Here is the name Nacari Montgomery Associates Llc put of Clarence NY

  • Rosalie Parker

    I think I just made a big mistake. I recently obtained a debt counselor who is consolidating my payday loans. Several weeks ago, AdvanceMeToday a payday lender accepted an offer from my debt counselor for $350 but today I get a call from AMT Recovery stating that if I did not respond within 48 hours they would begin arbitration. I told this woman to let me consult with my debt counselor and I would get back to her but she was persistent (Andrea at 866-551-7325 X1212). She was not trying to listen to me so I hung up and she called me back 3 times. I was intimidated because I am at work and the calls are coming through the main switchboard. She tried to say that I owed this company who by the way are not licensed to do business in New York State and not to mention that I have already paid them 3 times more than I borrowed. Anyway because I am at work I made an arrangement to pay $350 in 2 installments. Now I am reading articles about payday loan scammers and I hope that is not the case with me because they have my bank information. I need to know what to do about this because I am afraid they will raid my bank account.

    • Gerri Detweiler

      Rosalie – If you think this is not a legitimate account you need to contact your bank immediately and ask them what you need to do to protect your account.

  • Dee mordaunt

    out of the blue this man called man and spoke to me as if i did a fraudulent crime> they also claimed they sent numrous attempts to collect this payday loan from last yr… but i never received such info…now they are threaten to summons me @ work …they wont tell me who they are what are my rights and how should i handle this

  • Pingback: Women More Likely to Take Out Payday Loans | ComparePlastic

  • Roxana

    Thanks for finally writing about >FTC Cracks Down on Payday Loan Debt Collector | Credit.
    com News + Advice <Loved it!

  • http://Massstreetgroup Demard jones

    Yeah the same people calling me alot mass street group threading me they going to take me to court talking about I have to pay a 1000 doallars in court in never receive any documentation stating that this is a big scam in need to be stop fast by law you only post to pay the prince pal amount in I over payed that they not getting a nother cent from me I already filed a coplaint with the FTC .

  • Instant Personal Loans, Same Day Payday Loan

    Useful information shared.I am very happy to read this article related payday loan. Thanks for giving us nice info. Fantastic walk-through. I appreciate this post.

  • Pingback: Beware of Fake Payday Loan Debt Collection Scam | Credit.com News + Advice

  • payday loans

    WOW just what I was searching for. Came here by searching for payday loans online

  • debbie

    Is it legal for cash call to collect a debt for western sky?

  • Amanda ferro

    Anyone ever heard of credit beacon brokerage the phone number is 888-669-6027. The woman spoke with my husband about unsecured personal loan and since we have been trying to get one for debt consolidation he said she could email him the contract. We did not accept contract not sign it or send any copies of our information to her. I felt Uneasy about it because she wanted moneyUp front before she could deposit Funds into The bank for us, so I did research and could not find
    anything anywheres about this “company” even when I do an address and telephone look up nothing comes up. She now claims that since my husband agreed on the phone that we are in a legal binding contract and that we now owe 1000.00 for the loan going into default.. Now we received an email that the company will collect the fee by server, via from your residence or via clients employer. Can they do this even though we never signed or faxed anything to them?

  • http://www.credit.com/ Credit.com Credit Experts

    You can call your state attorney general’s office to report it. In addition, you can submit a complaint to the Consumer Financial Protection Bureau. Good luck to you, and we’re glad you didn’t lose money to a scammer.

  • http://www.credit.com/ Credit.com Credit Experts

    Dwayne –
    It sounds as if it couldn’t hurt to inform your employer or the bank. And that not telling them might have some serious consequences.

    Good luck.

  • http://www.Credit.com/ Gerri Detweiler

    Do not send them money! You are very likely dealing with a scam. Reputable debt collectors will send you written notification of the debt. Have they done this? (By mail – not email or fax?) If not, then tell them you want mailed written notification of the debt.

    if they say they will serve you then tell them to go ahead. If they actually do, then you can get legal advice. But I highly doubt it will happen. Process servers usually just show up trying to catch the person they are serving unaware because that’s how they get paid.

    This sounds like a scam so please proceed with extreme caution.

    • Susann

      Thank You Gerri. I asked for verification and was told they sent in via US Mail in December 2011 and again 3 months ago. If they call again, I will insist they mail it to me again!

  • http://www.Credit.com/ Gerri Detweiler

    Ignore it. it has scam written all over it. Read the article in my comment to Dhalton below.

  • http://www.Credit.com/ Gerri Detweiler

    Sounds like another scam. Payday loan debt collection scams are a dime a dozen. Please read this article: 9 Signs You Are Talking to a Debt Collection Scammer

  • http://www.Credit.com/ Gerri Detweiler

    Thanks Sam. Glad it helped!

  • http://www.Credit.com/ Gerri Detweiler

    Exactly right.

  • http://www.Credit.com/ Gerri Detweiler

    If it’s a scammer there’s not a lot you can do as they are probably based overseas. But you’ll find some ideas in this article (look in particular at the second page): 7 Ways to Stop Overseas Debt Collection Scam Calls

  • http://www.Credit.com/ Gerri Detweiler

    So glad to hear you didn’t get taken!

  • http://www.Credit.com/ Gerri Detweiler

    This definitely sounds like a scam. The fact that they have all your information does NOT mean it is legitimate – they buy this information in order to scam people. Legitimate collectors must send written notification of the debt within 5 days of contacting you by phone (automatically) and then you have the right to dispute the debt. Do NOT pay them anything based on this phone call, Insist on written notification of the debt as required under the Fair Debt Collection Practices Act and watch what happens – they will give excuses why they can’t send it/don’t have to send it/are taking you to court immediately etc. Don’t let them intimidate you.

    • Daisy

      I called them back this morning and asked for written verification of the debt and he first asked about an address I had over three years ago. When I said that wasn’t current he listed my last address (moved about seven weeks ago), and then said that if I changed my address at the post office I would have gotten the notice already because it was sent 30 days ago. When I insisted I never got it and asked for it to be resent he said that was absolutely not possible. Would that be true? They also haven’t asked for me to verify my identity with birth date or anything either time that I called.

      • http://www.Credit.com/ Gerri Detweiler

        Ask for their name and address – it’s your right to request that – and tell them you’ll be filing a complaint with the Consumer Financial Protection Bureau for failing to send you written notice of the debt. Once you are assertive about your rights they will very likely back down. There are simply too many red flags in your description of the call and payday loan collection scams are incredibly common.

Find out where you stand.
Get your FREE personalized credit report card.

Sign Up Now
X

Stay connected to our experts

Please submit your email address to get credit & money tips & advice
from our team of 30+ experts, delivered weekly to your inbox.