An Alleged Fake Pay Day Loan Debt Collection Operation Collects Almost $5 Million From Victims, According to FTC

The Federal Trade Commission announced yesterday that a U.S. District Court has stopped an alleged fake operation that collected  almost $5 million in payday loan debts from consumers that did not really owe.

According to the FTC release, the scammers would call consumers and claim to be law enforcement or other government authority. Furthermore, they would falsely threaten to immediately arrest and jail consumers if they did not agree to make a payment on a delinquent payday loan.

The callers typically would demand anywhere from $300 to $2,000, or sometimes would claim they were filing a large lawsuit against the consumer because of the delinquent payday loan.

But according to the FTC, “… consumers did not owe money to defendants – either the payday loan debts did not exist or the defendants had no authority to collect them because they are owed to someone else, according to the FTC.  The court order stops the illegal conduct and freezes the operation’s assets while the FTC moves forward with the case.”

Unfortunately, this is not a new trend. Bette Business Bureau has investigated these types of calls in the past and the scenario is always the same.

Here are a few tips BBB has if you receive a call from a debt collector:

If you have more to add to the conversation please share with us!