Home > Managing Debt > FTC Shuts Down 12 ‘Rogue’ Debt Collectors

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Debt collectors allegedly told a consumer’s 84-year-old mother they had a warrant for her daughter’s arrest in one case. They told another she wouldn’t be able to see her children. A different collector allegedly kept harassing consumers over outstanding payday loans it had acquired, even after it was told by the seller the debts were invalid.

All the firms who allegedly took part in those practices are out of or temporarily banned from the debt collection business, the Federal Trade Commission said Wednesday. As part of its Operation Collection Protection, the agency announced a crackdown involving 30 new law enforcement actions by federal, state and local authorities.

“Being in debt is stressful enough for many Americans without also being subjected to intimidation and false threats,” FTC Chairwoman Edith Ramirez said in a prepared statement. “Debtors have certain rights and rogue collectors that step outside the law will face the consequences of illegal behavior.”

One of the cases involves a KIP LLC, run by a married couple in Aurora, Ill. The FTC says Charles and Chantelle Dickey threatened and intimidated consumers to pay payday loan debts they either did not owe, or did not owe to the defendants.

“They threatened to garnish consumers’ wages, suspend or revoke their driver’s licenses, have them arrested or imprisoned, or sue those who did not pay. Many consumers paid, even though they may not have owed the debts,” the FTC said.

The couple agreed to a ban on working in debt collection and to a $6.4 million judgment. A number associated with KIP was not operational when called for comment.

“My office receives thousands of calls and complaints each year from consumers who are victims of illegal debt collection tactics,” said Illinois Attorney General Lisa Madigan. “Through our partnership with the FTC and states across the country, we are putting scam operations out of business and protecting consumers from abusive practices by legitimate creditors.”

The FTC also announced actions against:

  • California-based BAM Financial. The FTC says the firm “extracted payments from consumers through intimidation, lies and other unlawful tactics … the defendants bought consumer debts and collected payment on their own behalf by threatening consumers with lawsuits, wage garnishment and arrest, and by impersonating attorneys or process servers.” BAM’s operations have been halted by a temporary restraining order issued by a California federal court. An email request for comment went unanswered.
  • New York-based Delaware Solutions. The defendants “bought payday loans supposedly owed to a company that repeatedly told them to stop collection efforts because the debts were invalid, and ignored consumers’ evidence that they had never authorized a payday loan,” the FTC alleges. The firm’s operations have been halted by a temporary restraining order issued by a New York federal court. A phone number listed for the firm was non-operational when called for comment.
  • New York-based National Check Registry. The firm “used lies and false threats to collect millions of dollars from consumers,” the FTC and New York attorney general’s office alleged. A settlement order bans the firm from misrepresenting material facts about any financial-related product or service. The firm’s owner, Joseph Bella, had previously settled related charges with the New York state attorney general in 2013. There was no answer at a phone number listed for National Check Registry.

Know Your Debt Collection Rights

When contacted by a debt collector, you may want to ask for written verification of the debt to get a better understanding of whether you are dealing with an unpaid balance you really do owe. You can learn more about what rights you have under the Fair Debt Collections Practices Act in this Credit.com article.

Remember, a legitimate collection account can do damage to your credit. You can monitor how one of these accounts is affecting you by pulling your free annual credit reports from AnnualCreditReport.com and getting your free credit scores each month on Credit.com. You can also dispute fraudulent collection accounts appearing on your credit report with the three major credit bureaus in an attempt to have them removed and your score restored.

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  • V_Triol

    I wonder which companies in Florida they are investigating. This happened to me – began to get letters demanding several hundred dollars related to a car rental contract I had made. They threatened to ruin my credit, set 30-day ‘deadlines’ for response, etc. I researched via the web and was able to finally – after 10 months! – get them to “close the case” and put in writing that no entry would be made into my credit file.

    I wrote letters, phoned them, recorded the calls (legal because they were recording calls themselves for ‘quality assurance’) and they finally backed off. They used what appeared to be legitimate letterhead from the car rental agency – and then included a form where I was to write down my credit card number and mail it back to them: red flag. As if, ha ha.

    They kept trying to back up their claim, and even sent a bogus invoice purporting to show the costs their company had incurred, from a business who oddly enough had no address or contact info on the invoice.

    I was lucky to have the time and wherewithal to battle the fraud, and I imagine there are many others who don’t, especially elders and new immigrants. Even my former boss said she was charged several hundred dollars by a car rental agency (note: the scam artists I encountered pretended to be associated with a car rental agency) because they said the car she had reserved was “from off airport” and she paid it simply to get on with their extended family vacation in another city and not bother with it.

    Go get ’em, Feds. I am sure the 12 so-called ‘debt collectors’ already under investigation are the tip of the iceberg.

    • http://www.mycreditcounselor.net Andrew Weber Certified SLC

      It definitely is just the tip of the iceberg.. the collections industry has well over 100,000 complaints per year, more than any other industry in the US. Bad apples and noncompliance are the norm. It would have been nice if this article listed the 12 agencies that were banned.

      Here’s a link to all the collectors banned by the FTC, not sure if it includes the 12 new ones:

      https://www.ftc.gov/enforcement/cases-proceedings/banned-debt-collectors

  • Amy Elizabeth

    I wish I had known this before…a collector in Massachusetts sent me a letter saying there was a warrant for my arrest because I didn’t show up to a court hearing. I owe them less than $1,000, for which refused to provide verification of debt. The court awarded them a certain amount, and they continued asking for more than they were awarded. The court sent me a copy of the ruling but never sent anything about a warrant. It has also been years since this happened and while they keep sending threatening letters, they have not done so much as attempted to garnish my wages, despite the court ruling. When I got that letter, though, I lost it. I was inconsolable. I have never been in trouble in my life, and I was convinced the cops were going to come and arrest me. It was awful.

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