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Federal agencies shut down 4 debt collectors for abusive practices

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Unpaid debt is no excuse for abusive debt collectors.

There’s a new federal-state enforcement initiative called “Operation Collection Protection” formed to shut down deceptive and illegal debt collection companies.

The team consists of the Federal Trade Commission, the Department of Justice, the Consumer Financial Protection Bureau, 47 state attorneys generals and state and local law enforcement.

Consumers need to know their rights

“Debtors have certain rights and rogue collectors that step outside the law will face the consequences of illegal behavior,” FTC Chairwoman Edith Ramirez said in a press release.

The Fair Debt Collection Practices Act protects consumers from certain collection practices. For instance, debt collectors cannot:

  • Make calls to you before 8 a.m. or after 9 p.m. local time
  • Tell anyone you owe money
  • Use harassment or abuse to force payment
  • Use obscene language.
  • Deceive you about how much you really owe
  • Trick you into paying by using such tactics as claiming you will be arrested
  • Contact you at your workplace if you’ve told them that your employers doesn’t permit such calls

According to Illinois Attorney General Lisa Madiga, “Illegal debt collection practices have surged in the wake of the 2008 economic crisis.”

“We are starting to see a growing number of calls from individuals who don’t owe the debt because they’ve either paid it off or didn’t have it in the first place,” Madiga said during a press conference in Washington, D.C.

Debt collectors top the list when it comes to consumer complaints. In September, 30% of the complaints received by the Consumer Financial Protection Bureau involved debt collectors. Last year, consumers filed more than 280,000 complaints with federal authorities about the industry.

4 Debt Collectors have been shut down

Under the new initiative federal courts temporarily halted BAM Financial over accusations of illegal collection tactics. The FTC claims the company harassed individuals and sometimes pretended to be attorneys. The FTC charges the company told an individual she would not be allowed to see her children and would be reported to the IRS if she didn’t pay the supposed debt.

Delaware Solutions was shut down over accusations of collecting debts from consumers who never owed a debt. According to the FTC the company purchased payday loans allegedly owed to a company. The company that sold the information to Delaware Solutions repeatedly told them to stop collection efforts because the debts were invalid. Delaware Solutions regularly ignored evidence that the alleged borrower had never taken out a payday loan.

National Check Registry agreed to shut down. By misrepresenting that debtors had committed check fraud, threatening arrest, lawsuits, property liens or imprisonment, they collected more than $8.7 million from debtors. National Check Registry failed to back up claims that debts were actually owed, they charged illegal checking processing fees of $8 when payments were made over the phone and illegally revealed debts to third parties.

A fourth company, K.I.P. LLC, also shut down and agreed to pay a $6.4 million judgment. The company was run by a married couple in Illinois. The FTC charges they ran a “phantom debt collection scheme” by intimidating individuals to pay loans they did not owe with threats like wage garnishment and arrest.

So far this year, the FTC has won over $88 million in judgments against debt collection companies.

 

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