Here’s what happens when you mix loose security with threatening scam artists
Last week, a federal judge finally shut down a nationwide scam.
For the past four years, a pair of companies (owned by a Norcross, Georgia, businessman named John Williams) has been “engaged in a nationwide debt collection scheme to deceive consumers into paying debts that consumers do not actually owe,” the Federal Trade Commission alleged in a lawsuit.
That suit was filed in May and on July 1, a U.S. district judge finally shut down the operation, but not until it took $3.5 million in phony debt collections.
Here’s how the scam worked…
- Williams’ companies stole the IDs of people who searched online for payday loan information and filled out forms asking for details.
- Even if those people didn’t ever take out a payday loan, the companies called and demanded payment – saying they had actually applied and been granted the loan.
- The companies trotted out every bad tactic in the book: They impersonated lawyers, threatened to revoke driver’s licenses and file criminal charges that would result in prison time, used “profane language,” and called “repeatedly or continuously with intent to annoy, abuse, or harass.”
“Many consumers in this case were victimized twice,” the FTC’s Jessica Rich told Collections & Credit Risk. “First when they inquired about payday loans online and their personal information was not properly safeguarded, and later, when they were harassed and intimidated by these defendants, to whom they didn’t owe any money.”
Falling prey to scams is just one way consumers can get into debt they can’t get out of, says Consolidated Credit president Gary Herman. While the FTC and other watchdog agencies are constantly closing them down, more scams are always popping up.
“So you need to be vigilant,” Herman says, “but you also need to be skeptical of payday loans. In almost all cases I’ve seen, there are better ways to ease your money problems.”
Consolidated Credit has a staff of certified credit counselors who will give you a free debt analysis for anyone struggling to make ends meet. Unlike scammers who promise the world but offer no references, Consolidated Credit has an A+ rating from the Better Business Bureau and has been in business for more than two decades.