Photo: Flickr/Alaskan Dude
At first, Mark Merola balked when he took a call from a debt collection agency that claimed he was hundreds of dollars behind on a payday loan payment.Merola knew he wasn’t delinquent on any loans and told them as much.
But when the caller began rattling off details about where he worked and threatened to call the police to arrest him, doubt set in. Merola forked over the $523.87 and hung up.
Unfortunately, he’s one of thousands of consumers the FTC says have been victimized in a $5 million debt collection scheme run by California-based American Credit Crunchers, LLC (Villa Park) and its owner, Varang K. Thaker.
These so-called phantom debt collectors often target consumers who have done business with payday lenders in the past with a simple formula:
Agents (often calling from India) ring victims up, tell them that their missed loan payments have fallen into collections, and threaten legal action if they don’t come up with the cash.
More often than not, the consumer either has no debt under collection or at least doesn’t owe anything to the company on the other line.
The rap sheet against Thaker and his company is pretty extensive, according to the FTC. More more than 4,000 consumers have filed complaints against the company in the last two years, saying callers demanded anywhere from $300 to $2,000 in late payments.
“Consumers should not be pressured into paying debt they don’t remember owing,” said David Vladeck, director of the FTC’s Bureau of Consumer Protection. “Legitimate debt collectors must provide consumers with both written information about the debt, and instructions for protecting themselves if they don’t think they owe the debt.”
What’s really troubling is how Thaker managed to come up with so many consumers’ Social Security and bank account numbers. Since all the victims had done business with online payday lenders at some point, the FTC says it’s possible he intercepted the information there.
More than 30 million Americans have some kind of debt under collection. Coupled with the fact that 20 million consumers are relying on short-term payday loans to make ends meet, and there are plenty of prime candidates ripe for the scamming.
For more information about how to handle caller fraudulent debt collectors, see this helpful FTC post: Who’s Calling? That Debt Collector Could Be a Fake.