Federal officials shut down California debt collection companies
Federal officials said Tuesday they have shut down two phantom debt collection companies run by a Villa Park man, alleging they took in more than $5 million over the last two years by tricking people into paying back loans they didn’t owe.
Often posing to be law enforcement officers or other government officials, callers from India threatened the victims with arrest, lawsuit or the loss of their job if they didn’t repay online payday loans.
The companies, American Credit Crunchers and an affiliated firm named Ebeeze, didn’t make the loans and had no right to collect the money, the Federal Trade Commission said. In many cases, the loans had already been paid off or a victim hadn’t even received the loan, but had only applied for it.
The companies somehow obtained the personal information from the payday loan applications and used it to try to collect money, the agency said. During one eight-month period, the companies made 8 million calls to consumers seeking repayments of debts.
“This is a brazen operation based on pure fraud,” said David Vladeck, director of the agency’s Bureau of Consumer Protection. “Consumers should not be pressured into paying debt they don’t remember owing.”
A federal judge in Illinois has halted the operations of the companies and frozen their assets, the FTC said. The agency also has sued the companies’ owner, Varang K. Thaker, with violating federal laws.
FTC officials said legitimate debt collectors must provide consumers with written information about the debt and that people cannot be arrested for failure to repay a debt. The agency warned consumers to watch out for fake debt collectors and provided tips to avoid the scam.
The threatening calls, in some cases purporting to be from the fictitious Federal Department of Crime and Prevention, intimidated people into paying the Villa Park company money to avoid arrest or embarrassment, the agency said.
JanLaree DeJulius of Las Vegas said she was called in April 2010 by someone saying he was from the Federal Government Department of Crime and Prevention, demanding repayment of a $763 payday loan her ex-husband had received a few months earlier that had been paid off.
The caller said that if the loan wasn’t repaid immediately, DeJulius would be arrested at her workplace, her wages would be garnished and an expensive lawsuit would be filed, she told reporters on a conference call Tuesday with the FTC. The caller had a lot of personal information, including DeJulius’ Social Security number and date of birth.
“It was intimidating enough that I didn’t want to go through that. I said I’ll pay you whatever it takes,” DeJulius said. She set up an installment repayment plan and $163 was charged to her credit card in June 2010 by American Credit Crunch, and a few weeks later $120 more was charged to her card with the notation DebtCollect.
A few months later she got another call seeking additional money, and then heard a news report about fake debt collectors. Her credit card company reimbursed her for the $163 payment. She then got a voice mail in August 2010 on her home, work and mobile phones from a person identifying himself as Officer Black of the Bureau of Crime Identification, warned her she would face “severe legal consequences,” including arrest, if she did not call back.
“They’re scum,” she said of the companies. “They’re not going after anybody who has a lot of money.... It seems like they go after the most vulnerable.”
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