The Federal Trade Commission and 50 federal and state law enforcement partners, including Nevada Attorney General Aaron Ford announced a nationwide initiative to protect consumers from phantom debt collection and abusive and threatening debt collection practices.
The initiative, called Operation Corrupt Collector, includes enforcement actions brought by the FTC, three federal partners and partners from 16 states against debt collectors engaged in illegal practices.
“Protecting consumers from fraud and other illegal behavior has been a priority for my office since day one,” Ford said. “So far this year, the Federal Trade Commission’s Consumer Sentinel Network has received more than 85,000 consumer reports related to debt collection, nearly 45% of which were related to debts the consumer did not owe or other abusive and threatening debt collection practices. My office is proud to be a part of this national effort to educate consumers about debt collection and provide much-needed resources.”
“For many years, we’ve been working with our law enforcement partners to crack down on illegal and abusive debt collectors,” said Andrew Smith, director of the FTC’s Bureau of Consumer Protection. “At a time when many are under financial stress, our coordinated actions today show that we’re continuing the fight against collectors who threaten people and try to collect debts they don’t owe.”
Operation Corrupt Collector includes five cases filed by the FTC, two cases filed by the Consumer Financial Protection Bureau and three criminal cases brought by the U.S. Department of Justice and U.S. Postal Inspection Service. States reporting actions as part of the operation include Arizona, California, Colorado, Connecticut, Florida, Idaho, Illinois, Indiana, Massachusetts, New Mexico, North Carolina, North Dakota, New York, Ohio, South Carolina and Washington.
In each of the new FTC cases announced today, the companies claimed to be collecting on debt that they cannot legally collect, or that people do not actually owe.
With the availability of contact information on the Internet, debt collectors can contact consumers using automatic telephone dialing systems that repeat artificial or prerecorded voice messages. Such robocalling has made it easier for debt collectors to employ abusive debt collection tactics.
In two of the cases, the companies made robocalls to individuals, telling them that they have been sued, or soon will be, if they do not pay up. In the third case, the companies called people claiming to be law enforcement officials or attorneys, scaring people with threats of arrest at their workplace, prison or suspension of their driver’s license if they did not pay right away.
Consumers are advised to find out who’s calling before paying anything. Get the name of the collector, the collection company, its address and phone number, and get validation information about the debt. Within five days of first contacting you, debt collectors must validate, or tell you the amount of the debt, the name of the current creditor and how to get the name of the original creditor.
Consumers should not respond to threats, the FTC said, and when scammers threaten arrest, suspension of a driver’s license or calling your employer if payment is not made, people should hang up and report the collector to the FTC.
It’s also important to know if the original creditor sold your debt or hired a company to collect it, and it is important to know if the caller is the original creditor’s collector.
A consumer can notify a debt collector in writing that he or she desires the debt collector to cease further communication. With minor exceptions, the debt collector is required to honor the request to not communicate.
In addition to law enforcement actions, state and local consumer protection agencies across the country are joining the FTC in rolling out new information to help consumers know their rights when it comes to debt collection and what steps to take if they receive a call trying to collect on a debt that they do not recognize. The FTC has created a new online dashboard with information about reports received from consumers on debts not owed and abusive and threatening collection practices.