To add insult to injury, phony debt collectors have deluged desperate people claiming they owe phantom debts (debts consumers don’t owe) or debts that cannot legally be collected.
So far in 2020, the Federal Trade Commission has received 85,000 complaints, 45 percent for phantom debts or abusive and threatening practices.
To stop the flood, the FTC and 50 federal and state law enforcement parties, including Connecticut Attorney General William Tong, announced last week a nationwide crackdown involving more than 50 enforcement actions against debt collectors. Operation Corrupt Collector includes five new civil and criminal cases and settlements in three cases, including actions in Connecticut and 15 other states.
In two South Carolina cases the FTC alleged that National Landmark Logistics and Absolute Financial Services illegally collected $15 million using robocalls leaving deceptive messages threatening imminent legal action. When consumers called back, the defendants falsely claimed they were a mediation or law firm, promised lawsuits, and used consumers’ personal information to convince consumers the threats were real.
The FTC halted their operations, froze both companies’ assets, and put them under a receiver’s control. The FTC also settled cases against Global Asset Financial Services Group, Hylan Asset Management, and Campbell Capital.
“We need to hold corrupt debt collectors accountable for the serious stress and harm they cause Connecticut residents,” Tong said. “Many of these collectors call or send official looking notices to consumers saying they owe non-existent debts. Sadly, some people fall for these illegal scare tactics.”
Under the Fair Debt Collection Practices Act debt collectors can’t use abusive, unfair, or deceptive practices. Specifically:
• A collector must send a written “validation notice” within five days of first contact, specifying amount owed, creditor’s name, and procedure to follow to question the debt.
• For a phantom debt, you can send a letter denying any or all of it, or ask for verification. If sent within 30 days of receiving the validation notice, the collector must send you written verification — a bill copy or amount owed — before trying to collect.
• Debt collectors can’t harass you, threaten harm, use obscene or profane language, repeatedly use the phone to annoy you, or lie. They can’t misrepresent the amount owed, lie about being attorneys or government representatives, falsely claim you’ll be arrested, or claim legal action will be filed if it’s not true.
They can’t collect interest, fees, or other charges unless the original contract or your state law allows it, deposit a post-dated check early, or take or threaten to take your property unless it’s legal.
• If you’re sued, respond by the specified date to preserve your rights.
• A debt collector cannot take money from your paycheck or your bank account unless it obtains a court order.
• A debt becomes uncollectable (“time-barred”) after the allowable collection period ends. Search online for Connecticut statute of limitations for debts.
• If you’re sued for a time-barred debt and don’t respond, the court could issue a court judgment and garnishment.
• Debt collectors can’t contact you before 8 a.m. or after 9 p.m., unless you agree. They can’t contact you at work if informed such calls aren’t allowed. Debt collectors can call you, send letters, emails, or text messages to collect a debt.
• To stop contact, send a letter requesting contact to stop. Once it’s received the collector can contact you only to confirm it’s stopping contact or to reveal a specific action, like filing a lawsuit.
• Report violations to our attorney general’s office, the FTC, and the Consumer Financial Protection Bureau. Also, you can sue — in state or federal court within one year of the date of the violation — for damages, like lost wages and medical bills. Without proof, you may still get up to $1,000, plus attorney’s fees and court costs.
Reach out to Harlan and let him know your questions, issues, and concerns as a consumer; send him an email at [email protected]