I spent a good part of last year reporting on fraud. Wire fraud. Mail fraud. Schemes that cost billions of dollars to tens of thousands of people. With that body of work, I figured I was an unlikely mark. And I was wrong.
“This is James Allen with Unified Processing. I have this number as an emergency contact for Byron Landry. This is regarding a formal complaint scheduled to be filed directly against him out of the State of Texas. I’m concerned that he’s unaware of the allegations he’s currently facing. … It’d be in Byron’s best interest to return my phone call immediately.”
James was the second debt collector to call my home in as many days asking for Byron Landry. Both threatened legal action or arrest. Neither identified the creditor in whose name they were attempting to collect. Which means both violated federal and Texas state law.
“Overall, our number two source of all complaints is debt collection. ID theft is number one.”
Steve Baker heads the Midwest regional office of the Federal Trade Commission. He says it’s difficult to sort out which collectors are using aggressive tactics to collect real debts from those who are running a swindle. But he says thousands of people are victimized every year.
One of the most common reasons people wind up in fake debt collectors’ sights is they’ve applied for a payday loan online. Whether or not they actually took the loan makes little difference. The information winds up in the hands of telemarketers, who call demanding payment.
“Often the callers pretend to be the local police and tell people that they owe a payday loan, and if they don’t pay it immediately over the telephone, somebody’s going to be at their house to arrest them.”
Other callers claim they’re attorneys and say they’re about to file a suit against the consumer. Baker says people will often pay up, even if they’re not sure they owe anything.
“The callers are often armed with a great deal of personal information about the consumer… So they may know the person’s name, their employer, their date of birth, their Social Security Number, and that lends a lot of credibility to these callers… And people tend to believe them, or if they’re not sure, they simply don’t want to take the risk in not paying.”
Tracking down and prosecuting fake debt collectors is tough. Often the individuals will spoof their phone numbers to hide their true location. Many are based in India. But some are closer to home. One outfit, calling itself First Integral Recovery, operated out of Houston until December 2011. According to a suit filed by the Texas Attorney General’s office, First Integral falsely claimed ties to law enforcement and threatened debtors with arrest. The lawsuit is still pending, but the company is no longer in business.
The FTC’s Steve Baker says anyone who receives a call regarding a suspicious debt should demand notice in writing — explaining what they owe and why, as well as the source of the debt.
“And of course people should know we do not have debtors’ prisons in the United States. People, you can’t be arrested for owing a debt.”