Authorities: Debt-collector scam bilked millions
Such a far-reaching fraud with so many millions of calls flooding in from India is something investigators haven’t seen before and was fostered in part by the plummeting costs of international calls, Baker, the FTC’s Midwest director, said.
While federal authorities seem to have put a halt to this one scam by freezing the assets of a California-based business allegedly involved, Baker said other similar scams are almost certainly up and running.
“We think this is just the tip of the iceberg,’’ he said.
Authorities have received more than 4,000 complaints about debt-collection schemes in recent years, said Baker. They describe aggressive, foul-mouthed callers, some of whom claimed to be agents of a nonexistent Federal Department of Crime and Prevention.
JanLaree Dejulius, of Las Vegas, was at work at a university office when she got a call from a man who gave his name as Officer Black. He knew one of her relatives had taken out a payday loan online. If Dejulius didn’t pay up, he said he would send someone to her work to arrest her, she said.
“I said, `Yeah, I’ll pay you — whatever it takes (not to get arrested),’’’ the 57-year-old said at a news conference in Chicago. “I consider myself savvy, but I fell for it.’’ She eventually agreed to pay $763.
Some callers threatened to call victims’ bosses or sue them. The scare tactics were so effective that in some instances people agreed to pay hundreds of dollars even though they knew that neither they nor any acquaintances had payday debts, said Baker.
From 2010 to 2012, $5 million was paid in 17,000 transactions to accounts controlled by the alleged fraudsters. The targets included people who applied for loans by punching personal details into a payday site but whose applications were rejected, Baker said.
Payday loans are typically small, very short-term loans with extremely high interest rates that are effectively advances on a borrower’s next paycheck. It is often people cash-strapped or living from paycheck to paycheck who use the service, Baker said.
Baker said to guard against scam artists, consumers should demand a written notice with debt amounts and the names of creditors. Debt collectors never have authority to arrest anyone, Baker added.
Article source: http://articles.boston.com/2012-02-21/news/31083696_1_payday-loan-debt-collectors-phone-scam
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