Phony debt collectors scamming victims into paying loans
Mar 15, 2012 (Menafn - Milwaukee Journal Sentinel - McClatchy-Tribune Information Services via COMTEX) --Wisconsin's financial regulator is warning of a scam in which crooks pose as debt collectors and pressure people into sending them money, in some cases to pay for loans the consumers never even took out.
Sometimes the fake debt collectors call with personal information they've somehow acquired, such as a bank account number, that makes them sound more legitimate, said Peter Bildsten, secretary of the Wisconsin Department of Financial Institutions.
"They often use high-pressure, threatening tactics in their attempts to dupe consumers," Bildsten said.
The most common threat: The person will be put into jail if payment isn't made. In one instance, a caller said a woman's nurse's license would be revoked if she didn't make a payment, department spokesman George Althoff said.
"It can be very scary," Althoff said. "It's certainly very high-pres sure and abusive practices that these people have been engaging in."
Since 2010, the Department of Financial Institutions has received more than 400 phone calls complaining about the debt collector scam, and another 160 written complaints, Althoff said.
"In just over two years, when you're saying we've fielded more than 500 complaints, that's a lot," he said.
The state financial regulator is aware of only 10 times in which people in Wisconsin fell for the scheme, losing an average of 400.
"But we don't know how many other people fell victim to it and never complained," Althoff said.
Often the fake collectors will demand money related to payday loans, but that is not the only type of loans they've cited while trying to confuse potential victims, he said.
"In some cases, these people may not even have taken a payday loan. They may have inquired about one. But in many cases it is a common thread," Althoff said.
The fraud typically involves persuading a consumer to make an electronic payment into a checking account, although some have been told to purchase a prepaid credit card to cover the supposed debt
Less than a month ago, the Federal Trade Commission was able to shut down an operation that allegedly collected phantom payday loans that consumers didn't owe. In that scam, the FTC said, consumers received millions of collection calls from India, taking in more than 5 million from victims over two years.
Thieves often pretended to be law enforcement officers or government authorities, threatening to arrest and jail people if they didn't agree to make a payment on a delinquent payday loan, according to court papers filed by the FTC in the U.S. District Court for the Northern District of Illinois Eastern Division. The Wisconsin Department of Financial Institutions helped with that case, the FTC said.
The department issued steps consumers can take if they are suspicious of a phone caller who is trying to collect debt:
Ask the caller for his name, company, street address and phone number, and say you refuse to discuss any debt until you get a written notice in the mail. That notice must include the amount of the alleged debt, the name of the collection agency, the name of the creditor and your rights under the Fair Debt Collection Practices Act.
Don't talk with the caller if you have not received written notice. Don't answer repeated calls.
Don't give the caller personal financial or other sensitive information, such as account or card numbers or a Social Security number.
Contact your creditor if the debt is legitimate, but you think the collector might not be.
Report the call to authorities. Contact the Wisconsin Department of Financial Institutions at www.wdfi.org or 800-452-3328, the FTC at www.ftc.gov or 877-382-4357 or the FBI at www.ic3.gov.
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