New rule allowing Ga. homeowners to halt foreclosures

New rule allowing Ga. homeowners to halt foreclosures.

Landlords – How Do You Collect That Eviction Judgment?

Landlord Judgments

So you had to Evict a Tenant. Completed court proceedings and the judge in your Landlord/Tenant case has decided in your favor, and now you’ve won your money judgment. But the court doesn’t actually make your tenant pay. The court leaves that collection process up to you. Perhaps the tenant will send you a check immediately.

But, more than likely, you’ll be waiting for months, even years. That lost money becomes nothing more than a write-off in most instances. Landlords often forego pursuit of the money judgment, seeing it as a lost cause. Although this process can be disheartening and intimidating, there is professional help available and it may be worthwhile.

What Is A Money Judgment?
First, let’s define what we mean by a money judgment. A money judgment is a court order that awards the plaintiff a sum of money. The award can be owed to the plaintiff for a variety of reasons. Some examples are unpaid rent, damages to a rental unit, money borrowed, hospital bills, credit cards, and money owed for repossessed vehicles. A money judgment can also include money owed for court costs and attorney’s fees.

What Is An Eviction Judgment?
In a civil matter or in our case – Landlord-Tenant Eviction, a money judgment is an order issued by a court that one party in the lawsuit is to pay the other party a certain sum of money. The amount of money awarded is referred to as a “money judgment”. Although a judgment gives the Landlord the right to collect the money owed, there are several legal steps involved before you get to the collection process.

How To Collect An Eviction Judgment?
Each state has its own criteria for recording judgments and enforcing the collection. In all probability it is best to have an attorney or collection agency handle the collection of judgments. Without professional legal counsel, mistakes may be made that will wind up costing the landlord more in the end.

It’s important for a landlord to be educated on the procedure for collecting on a judgment award. Individual cases may vary but a tenant will usually receive an order by law such as a signed judgment stipulation. However, it is not until the judgment is recorded that is becomes enforceable. In order to facilitate actual collection, a “Writ” or “Order” of Execution must first be obtained.

Each jurisdiction handles this process slightly different so it is important to contact the appropriate local government agency or the sheriff’s office. Once the collection process begins, there are several possibilities that may occur to force your tenant(s) to pay.

Provided the proper procedure for your jurisdiction has been followed, the judgment will appear on a transcript file, which is usually submitted, to all credit reporting agencies. These measures are what most often force a tenant to pay the judgment or negotiate a settlement with the landlord because a recorded judgment on their credit report can prevent them from obtaining a credit card, automobile loan, student loan, or home mortgage.

Attorneys and judgment recovery agencies encounter numerous circumstances where tenants contacted them sometimes years later, to make settlement on this type of judgment.

In order to proceed with any of the above remedies, you must have knowledge of the existence of the tenant’s assets. Assets including wages, bank accounts, vehicles and personal property may be seized to satisfy a judgment. This information is easier to access by using a comprehensive rental application when screening your tenants.

Without the tenant’s asset information, collecting on a judgment becomes more expensive. Under these circumstances the judgment award may not be sufficient enough to compensate the costs involved.

Unless a tenant files for bankruptcy, a judgment is valid for a period of ten years from the date it was entered by the Court. In addition, prior to the expiration of the ten year period, you can apply to the Court for an extension for an additional ten year period. Therefore, you have a total of twenty years to collect on your judgment.

Although, it can be advantageous for the landlord to collect on a judgment award, it is wise to have the assistance of an attorney or judgment recovery agency. Professional fees may be negotiated and are often deducted from the amount collected. Unlike attorneys, a judgment recovery specialist or agency will recover your judgments at no cost to you. Attorneys will usually bill you hourly or require an upfront payment from you. They typically hire investigators to locate assets and bill those service fees back to you. Some law firms will actually engage a judgment recovery agency to handle the judgment once its awarded in court.

One of the many benefits of a judgment recovery firm is that they have direct access to private databases and have vast experience locating assets, skip tracing debtors, seizing assets and uncovering all the hidden assets your debtors are trying to hide from you just hoping you will go away or give up. When selecting a judgment recovery agency you should ensure they are certified and have been in business for at least two years.

Note: post shared via REIclub.com. 

Dedicated Solutions Group is a certified Professional Judgment Enforcement firm that specializes in Judgment Recovery and Collections at NO COST.  www.dedicatedsolutionsgroup.com

Bank to pay homeowners up to $30,000 to sell

Bank of America is offering homeowners up to $30,000 to sell their homes in a short sale.

The nationwide program, announced this week, is the expansion of a pilot program that started in Florida last year. That program offered homeowners $5,000 to $20,000, with the average payout being $12,000.

 The new program offers homeowners $2,500 to $30,000 in “relocation assistance.”

Click to view News Video : Bank to pay Homeowners

8 things debt collectors won’t say

The calls may be scary, but you do have rights you should know about. Here are some things to know before you decide how to respond.

It should come as no surprise that if you fall behind on your bills, you may hear from debt collectors.

If they do call, you will almost certainly hear that you need to pay them and that you need to do so immediately. But there are a number of things that they aren’t likely to tell you, and knowing these things can make all the difference in resolving your debts.

1. Some of our threats have no teeth

If you can’t pay the collector the amount he is demanding, or refuse to give your bank account or debit card number to make the payment, the debt collector may threaten to “put you down for ‘refusal to pay.'” But that’s “a meaningless phrase in the debt collection world,” says ZipDebt.com founder Charles Phelan, who coaches consumers trying to settle debts. He elaborates:

“When a collector says, ‘We are going to inform your creditor that you are refusing to pay this bill,’ they are just using reverse psychology. Your creditor has already figured out that you aren’t paying the bill, or they would not have sent your account to a collection agency in the first place.”

Another example? Bogus deadlines. Says Phelan, “Collectors will always try to create a false sense of urgency by imposing a series of deadlines, after which ‘this deal will no longer be available.’ The reality is that settlement or workout offers tend to improve over the course of a typical three-month collection assignment.”

2. We have to stop bugging you at work if you tell us to

The Fair Debt Collection Practices Act is very clear on this point. Once you tell a debt collector that your employer doesn’t allow you to talk with her while you are at work, she must stop calling you there. Yet in its 2011 Annual Report to Congress about Fair Debt Collection Practices Act complaints, the Federal Trade Commission noted that in 2010 it received 17,008 complaints related to debt-collection calls to consumers at work, up from 11,991 complaints the year before. “By continuing to contact consumers at work under these circumstances, debt collectors may put them in jeopardy of losing their jobs,” notes the FTC.

3. We can’t blab about your debts to others

Debt collectors are generally allowed to discuss your debt with only you, a co-signer, your spouse or your attorney. They may not discuss your debt with neighbors, relatives who aren’t obligated to pay the debt, or co-workers. In fact, they are generally allowed to contact third parties only to locate you, and once they have found you, contact with third parties must stop. Consumer lawyer Sukhman Dhami of the Dhami Law Firm, explains:

“We call these ‘third-party disclosures,’ a violation of Section 1692c(b) of the Fair Debt Collection Practices Act, and they are exceptionally common, particularly when the debt collector leaves a message on a public answering machine. These public answering machine violations are called ‘Foti’ violations after the landmark case Foti v. NCO Financial Systems, 2005.

“If a debt collector leaves a message for you on any conventional answering machine or any shared/open-access voicemail system, they are likely to violate the third-party disclosure restrictions per Foti, so save any machine message and/or voicemail which a debt collector leaves for you!”

He goes on to warn, “If a debt collector contacts third parties, we want to know about it, because chances are that the collector violated one or more provisions of the FDCPA.”

4. Your debt may be too old for us to do anything about it

“Stale debt is not collectible,” advises Atlanta bankruptcy attorney Jonathan Ginsburg. “Every state has a statute of limitations that makes debt of a certain age not collectible. Debt collectors are not currently obligated to advise you that they cannot sue you or legally ding your credit report if you refuse to pay stale debt.”

In most states, the statute of limitations runs four to six years from the date you last made a payment. And that’s the catch. “In some states, a voluntary payment on a stale debt can revive the debt and make it legally collectible,” Ginsberg warns. But don’t be surprised if you hear about a very old debt. “Stale (or zombie) debt is big business,” he adds.

 “Seniors are constantly targeted for old debts,” says Alex Viecco of New Era Debt Solutions. Viecco says his firm is seeing a trend where debts that were the result of identity theft are “coming back around for consumers. They certainly do not remember it, and suddenly (collectors) act as if it was theirs.” He says his firm also hears from clients who complain about old medical debts that should have been paid by the insurance company and resurface years later.

“Never admit to any debt without first getting more details,” recommends Viecco. At a minimum, you want to establish that the debt is legitimate, you owe it, the collector on the other end of the phone isn’t a scammer, and the statute of limitations hasn’t expired.

At the same time, don’t assume that just because a debt is older it can’t be collected, or that it can’t affect your credit reports. “There are a handful of states that do require the collector to tell the consumer that they cannot be sued,” says Mark Schiffman, director public affairs for ACA International, a trade organization for collections professionals. “While it is true that every state has a statute of limitations, which varies by state and by debt type, and that a collector may not sue or threaten to sue a consumer, the collector may still seek to collect the debt from the consumer so long as it is within the guidelines of the Fair Debt Collection Practices Act.” He also notes that under the Fair Credit Reporting Act, collection accounts may be reported for seven years.

5. We are under pressure to collect, just as you are to pay

Collectors “work on sliding scale commissions, and the quicker they get someone’s money, the higher the commission,” says Philadelphia debt-collection abuse lawyer Michael Forbes. “If they don’t get your money within a fixed period of time, your account will be sent back to the creditor.”

So while collectors may pressure you to pay right away, staving them off a bit might work in your favor if you can’t afford to pay the full amount you owe. “Collectors will generally not share that they may take a lower settlement offer at the end of the month in order to meet a quota, or nearer the end of the assignment contract when the creditor is going to pull the account back,” says Michael Bovee with DebtConsolidationCare.com, a free, online debt-advice community website that includes sample debt collection letters. He explains that most assignment collection accounts (where creditors assign debts to collection agencies rather than selling them) stay with collectors for 90 days. Any accounts that are not collected at that point may go back to creditors, usually to be placed with another collection firm.

And while collectors may insist that you pay the full balance you owe over time, they may actually prefer to get a smaller, lump-sum payment, says Phelan. Why? “They get paid commissions much faster that way!”

6. If we really want to play hardball, we will have to sue you

If you owe unsecured debt such as credit card debt, collectors must typically sue you before they can go after your property, including money in your bank accounts, or try to garnishee your wages. Threatening to take such actions before they have sued you and won a judgment may be illegal. Even threatening to sue you to collect a debt may be illegal if the collector has no intention of doing so.

The FTC reports that in 2010, more than a quarter of all FDCPA complaints reported that third-party collectors falsely threatened a lawsuit or some other action that they could not or did not intend to take. In addition, 18.6% of FDCPA complaints alleged that such collectors falsely threatened arrest or seizure of property. No doubt some of these complaints involved overseas payday loan collection scammers. Still, some involved calls from collectors in the U.S. trying to collect legitimate debts.

“Debt collectors use applied psychology to persuade and threaten consumers to pay debt,” Ginsberg explains. “Often this psychology involves veiled threats of criminal action or litigation when these options are not available.”

7. Paying off this debt won’t help your credit scores

Under the Fair Credit Reporting Act, a collection account will remain on your credit reports for seven years and six months from the date you fell behind with the original creditor. Collectors may make it sound like paying off collections account will improve your credit, by telling you that they will update your credit report to “paid in full” status. But this probably won’t help your credit scores. Collection accounts are negative, whether they are paid or not.

In an article titled “Will paying a collection improve my credit score?” Credit.com’s credit scoring expert Tom Quinn wrote:

“The fact that a collection account is on your credit report (regardless of balance) is, in and of itself, predictive of future risk, as research shows that consumers with collection accounts on their credit report are less likely to pay as agreed in the future than consumers with no credit report blemishes.”

On the other hand, paying the collection account may stop the creditor or collector from suing you, and a judgment on your credit report could hurt your credit score even more. Additionally, some mortgage lenders may require you to pay or settle collection accounts before giving you a loan.

8. You probably don’t have to pay your deceased relative’s debt

“Collecting debts of the deceased is a growing and lucrative business. Creepy, huh?” says Mary Reed, the co-author of more than 20 legal and financial books (including the book she co-authored with the writer of this article, “Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights.”) But generally, she points out, you aren’t responsible for the debts of relatives who died unless you were a co-signer, or the debt belonged to your spouse who died and you live in a community property state. Creditors or collectors may try to collect from the estate, if there is one. If the person left nothing, however, then they may simply be out of luck. Although they are supposed to tell you that you don’t have to pay the debt, they may conveniently leave that out or gloss over it.

By Gerri Detweiler, Credit.com

$7.5 billion in Court-Ordered Debt to be Collected

The state of California has about $7.5 billion in court-ordered fines and fees sitting around just waiting to be collected, according to an article from investigative journalism group California Watch.

The debt is owed to California for various fees, fines, and penalties imposed by courts for everything from traffic violations to criminal offenses. The state’s court system is currently exploring options for collecting the money.

But by law, the job of collecting court-ordered debt falls to individual counties. The counties have latitude to decide how to approach debt collection. One county, Shasta, is so aggressive it handles the debt collection for five other nearby counties. And some use private collection agencies to pursue the debtors.

The piece noted that an attorney representing private collectors had brought up that possibility at the last meeting of the Judicial Council, the policymaking group for California state courts, as he implored the Council to create incentives for counties to deal with their debt collection issues.

Consumer advocates argue that much of the debt is probably uncollectible and should be written off. But California Watch said that their analysis of the court system’s debt data shows that the total has increased by $2 billion since the 2008-09 fiscal year, meaning much of the debt is not old.

Because each county deals with its debt collection individually, a strong business development plan could reap rewards in the Golden State.

State to Require Creditors to Validate Consumer Debts

The Massachusetts Attorney General published onerous new consumer debt collection practice regulations, deeming their violation to be an unfair trade practice. These regulations, which became effective upon publication, purport to govern every business and person nationwide who engages in collecting a consumer debt (defined as any debt resulting from a purchase, lease or loan of goods, services or real or personal property or for a loan of money obtained for personal, family or household purposes, whether or not reduced to a judgment) from a person located within Massachusetts.

The rules are extraordinary in that, among other things, they impose validation and verification requirements on creditors collecting their own debts, rather than just on third party debt collectors or purchasers of defaulted debt as under the federal Fair Debt Collection Practices Act (FDCPA).

Specifically, 940 CMR 7.08 requires that during or within 5 days of its initial communication with a Massachusetts debtor in connection with the collection of a consumer debt that has become more than 30 days past due (unless a different period is agreed to by the debtor), the creditor (defined to mean any person or entity and their agents, servants, employees or attorneys, or a buyer of a delinquent debt who hires a third party or an attorney to collect it) must provide the debtor with (a) the amount of the debt; (b) the name of the creditor to whom the debt is owed; (c) a statement that unless the debtor, within 30 days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the creditor; and (d) a statement that if the debtor notifies the creditor in writing within 30 days after receipt of this notice that the debt, or any portion thereof is disputed, the creditor will obtain verification of the debt and provide the debtor, or an attorney for the debtor, additional materials.

If the debtor or the debtor’s attorney notifies the creditor in writing within the 30-day period that the debt is disputed, the creditor must cease collection of the debt until the creditor verifies the debt and provides the debtor or any attorney for the debtor with copies of: (a) all documents, including electronic records or images, which bear the signature of the debtor and which concern the debt being collected; (b) a ledger, account card, account statement copy, or similar record, whether paper or electronic, which reflects the date and amount of payments, credits, balances, and charges concerning the debt, including but not limited to interest, fees, charges or expenses incidental to the principal obligation which the creditor is expressly authorized to collect by the agreement creating the debt or permitted to collect by law; (c) the name and address of the original creditor, if different from the collecting creditor; and (d) a copy of any judgment against the debtor. If the creditor does not possess, have custody of, or control these materials, the creditor must cease collection of the debt until the creditor has made reasonable efforts to obtain them and provide them to the debtor.

The validation requirement poses substantial compliance challenges. Although “conduct which is not the collection of debts” is excluded from coverage (940 CMR 7.02), the regulations do not define what conduct constitutes or does not constitute the collection of debts. For example, is the validation requirement triggered when a creditor sends a monthly billing statement which requests payment to a Massachusetts debtor on a past due account? Does a creditor commit an unfair trade practice when it fails to provide a validation notice after a debtor’s initiation of the initial communication in connection with the collection of a past due debt with any one of the creditor’s employees, agents or attorneys?

Also, among other requirements and prohibitions, the regulations limit the number or telephone calls or text messages that a creditor may send to a Massachusetts consumer to two communications in each 7 day period for each debt, and to the hours of 8:00 a.m. and 9:00 p.m. Eastern. 940 CMR 7.04(f) & (g). They deem a creditor’s stating that it will take any action, including legal action, that it does not actually take or attempt to take to be an unfair trade practice, unless an additional payment or new agreement to pay has occurred within the stated time period. 940 CMR 7.04(m). They provide that it is an unfair trade practice to fail to disclose the telephone number and office hours of the creditor or his agents on all written communications with the debtor. 940 CMR 7.07(22). They impose a number of limitations regarding contact with other persons living in the debtor’s home and third parties. 940 CMR 7.05, 7.06. And they prohibit a creditor from collecting or attempting to collect from any person payment of a debt that the creditor knows or has reason to know is time-barred, or from seeking or obtaining from any person an admission, affirmation, acknowledgement of a new promise to pay, or any waiver of legal rights or defenses with respect to such a debt, unless the creditor discloses in a prescribed format that the debt may be unenforceable through a lawsuit because the time for filing suit may have expired, and that the debtor is not required by law to do what the creditor is requesting. 940 CMR 7.07(24).

David M. Bizar is a partner in the Boston office of Seyfarth Shaw LLP.

NCO Settles Debt Collection Action with 19 States

Ohio Attorney General Mike DeWine announced today that his office lead a settlement between NCO Financial Systems and 19 states which will see NCO pay up to $1.5 million in restitution to the AG offices and consumers in the states.

DeWine said that since 2008 his office had been working with the AGs of 18 other states on the investigation into NCO’s debt collection practices. The announcement did not carry specific allegations of wrongdoing, but laid out criteria for consumers to receive compensation.

“We believe this is a fair settlement that will help uphold consumers’ rights under the Fair Debt Collection Practices Act,” DeWine said. “NCO is agreeing to provide restitution for eligible consumers, to provide stronger notifications to credit reporting agencies and consumers, and to implement policies to ensure compliance with federal and state law.”

In signing the settlement, NCO agreed to take certain steps to comply with existing laws, including additional training and the continued monitoring of its agents. The company did not admit to any wrongdoing in the settlement.

“NCO is proud of its record on consumer compliance,” said Ronald Rittenmeyer, NCO’s CEO. “We are pleased to resolve the Multi-State Group’s concerns, as well as upgrade our compliance processes, all which will permit us to improve our consumer interaction. As the largest provider of accounts receivable collection services in the world, we will continue to set the highest standards of compliance for the industry.”

The agreement calls for NCO to pay $575,000 to the states to reimburse for the cost of the investigation. In addition, the company will set aside $50,000 per state – a total of $950,000 – to compensate consumers that can show they wrongly paid NCO.

Consumer restitution will be available for three years following the effective date of the agreements for consumers who have valid claims that meet one of the following criteria:

• Consumer paid NCO a third party debt that the consumer did not owe;
• Consumer overpaid interest on a third party debt that was not supported by the underlying agreement between the debtor and the original holder of the debt or as otherwise permitted by law; or
• Consumer paid more on a third party debt than the amount NCO agreed to settle the account.

Joining Ohio in the multi-state working group were the following states: Alaska, Arkansas, Idaho, Illinois, Iowa, Kentucky, Louisiana, Michigan, Nebraska, Nevada, New Mexico, North Carolina, North Dakota, Oregon, Rhode Island, South Carolina, Vermont, and Wisconsin.

Judgments on Credit Reports

Satisfaction/Release of Judgment – leave it to court computer or send letters to the CRA’s?

I recently obtained satisfaction/releases for two separate judgments. Both judgments (and release orders) were entered in the same county court. Should I send copies of each satisfaction/release to Experian, Equifax, and Trans Union or should I wait and see if the judgments are removed by virtue of the credit reporting agencies picking the releases up off of the court computer or a public records database?

As a brief, follow-up, if I do send letters should I ask that the judgments be deleted entirely? Do the reporting agencies have the option of leaving the judgments on my credit report and simply stating that the judgment has been paid or released? – Josh, Chicago

Reply from DebtCollectionAnswers:

This is a great question. Unpaid judgments may be reported for seven years, or for the applicable statute of limitations, whichever is longer. Once paid, judgments may be reported for seven years from the date of entry by the court.

You did not mention how old these judgments are. If they are more than seven years old, then the once the credit reporting agencies have proof that you have paid them, they should come off your credit reports completely.

If they are not seven years old, then your credit reports should be updated to reflect the fact that they have been paid once you provide the information showing that they have been paid. At that point, the balances should be listed as zero and you will see a notation that they are paid. However, you will not likely see your credit scores improve. Thatís because the judgments will still be considered negative items.

You can certainly wait to see whether the credit reporting agencies update your reports automatically. However, if you have proof that they are paid, we would recommend you go ahead and supply that to the credit bureaus. That way you can ensure that your credit reports will be updated as soon as possible.

We hope this helps! Congratulations on putting these judgments behind you.

Attorney General intervenes to stop illegal payday lending

Attorney General intervenes to stop illegal payday lending in Georgia

ATLANTA — At the urging of Georgia Attorney General Sam Olens’ office, Payday Financial, LLC, Green Billow, LLC and Western Sky Financial, LLC, payday lenders which claim to be Native American owned and operated, have agreed to cease making loans in Georgia.

“When it comes to payday lending in Georgia, there is no gray area. It is unquestionably illegal in any form,” said Attorney General Sam Olens. The Attorney General’s office alleges that the companies made illegal payday loans in Georgia through websites they operate. Georgia law specifically prohibits the making of payday loans, including the making of payday loans to Georgia residents through the internet (O.C.G.A. § l6-17-1, et seq).

According to the Federal Trade Commission, Martin A. Webb operates Payday Financial, LLC, and several related businesses in Timber Lake, South Dakota. The entities offer short-term, high-fee, unsecured payday loans of $300 to $2,525 to consumers throughout the country, advertising on television and through websites.

The businesses purport to be “wholly Cheyenne River Sioux Tribal Member owned…operating within the Cheyenne River Indian Reservation.” Although, attorneys for Mr. Webb claim that the companies are exempt from Georgia law due to tribal (sovereign) immunity, the Attorney General’s office has made clear that when a company conducts business in Georgia, Georgia law applies.

“We will not stand for unscrupulous, out-of-state lenders taking advantage of Georgia consumers by skirting our laws.”

“The Attorney General’s timely and decisive action resulted in this entity ceasing to do business in our state,” said Governor’s Office of Consumer Protection Administrator John Sours. “We are pleased that Georgia consumers will benefit and look forward to ridding our state of all such illicit operators.”

Court Halts Alleged Fake Debt Collector Calls

Court Halts Alleged Fake Debt Collector Calls from India, Grants FTC Request to Stop Defendants Who Posed as Law Enforcers

California-based Defendant Ran Phantom Debt Collection Scheme from His Home, FTC Alleges

In response to charges from the Federal Trade Commission, a U.S. district court has halted an operation that the agency alleges collected phantom payday loan debts that consumers either didn’t owe to the defendants or didn’t owe at all. The defendants’ scheme involved more than 2.7 million calls to at least 600,000 different phone numbers nationwide, according to the FTC. In less than two years, they fraudulently collected more than $5.2 million from consumers, many of whom were strapped for cash and thought the money they were paying would be applied to loans they owed, according to FTC documents filed with the court.

The court order temporarily stops the illegal conduct and freezes the operation’s assets while the FTC moves ahead with the court proceedings and seeks refunds for consumers.

As part of its continuing crackdown on scams that target consumers in financial distress, the agency charged Tracy, California-based Kirit Patel and two companies he controls with violating the FTC Act and the Fair Debt Collection Practices Act.

Often pretending to be American law enforcement agents such as “Officer Mike Johnson” or representatives of fake government agencies like the “Federal Crime Unit of the Department of Justice,” callers from India who were working with the defendants would harass consumers with back-to-back calls, according to the FTC. One consumer reported that the caller threatened to have her children taken away if she did not pay, according to court documents.

Another consumer told the FTC, “The callers threatened me and claimed they would arrest me if I didn’t pay them the alleged debt. One of the callers even contacted my neighbors and told me he was watching my house. The callers had a lot of . . . personal information about me, including my work address. One caller told me, ‘We just saw you walk into your office building,’ and then listed my office address. Another caller told me there were 55 warrants out for my arrest. Sometimes my caller ID would indicate that the call was from the FBI. Because the callers knew so much about me, I believed they were police officers or FBI agents. The calls scared me and I was often shaking when I hung up the phone.”

In difficult economic times, consumers may turn to high-interest, short-term payday loans between paychecks. The FTC alleges that information submitted by consumers who applied for these loans online found its way into the defendants’ hands.  Because the callers had this information – which often included Social Security or bank account numbers – and because many of the victims already were in a tenuous financial situation, they often believed that they owed the defendants the money, according to the FTC. In some cases, when consumers made the allegedly bogus payments, they had nothing left over to cover legitimate expenses: Two mothers reported that they could not buy Christmas presents for their families after making payments on the phony debts.

The defendants typically demanded several hundred dollars and, in violation of federal law, routinely used obscene language and threatened to sue or have consumers arrested, according to the FTC’s complaint. They also threatened to tell the victims’ employers, relatives, and neighbors about the bogus debt, and sometimes followed through on these threats, the FTC alleged.

Once victims were pressured into paying, the callers instructed them to use a pre-paid debit card such as a Wal-Mart MoneyCard, another debit card, a credit card, or Western Union so the money could be deposited into one of the defendants’ merchant processing accounts, the FTC alleged. Even after victims made a payment, the harassing calls often continued, forcing them to change their phone numbers, or close their credit cards or bank accounts in an effort to get the calls to stop, according to documents filed with the court.

The FTC alleged that of the $5.2 million the defendants collected, almost $1 million was returned or charged back by their merchant processor, resulting in consumer injury totaling more than $4.2 million.

The complaint alleges that the defendants violated the FTC Act and the Fair Debt Collection Practices Act by:

• misrepresenting that they had the authority to collect on supposedly delinquent loans that consumers owed, they were a law enforcement authority or were affiliated with a government agency, and that consumers would be arrested, imprisoned, or sued; and
• using obscene or profane language, and calling consumers repeatedly with the intent to annoy, abuse, or harass them.

For more information about how to handle callers who claim to be debt collectors, see

Who’s Calling? That Debt Collector Could Be a Fake.

The Commission vote authorizing the staff to file the complaint was 4-0. The FTC filed the complaint and request for a temporary restraining order in the U.S. District Court for the Eastern District of California on April 3, 2012.  On April 5, 2012, the court granted the FTC’s request.  

The FTC would like to thank the Better Business Bureau for its assistance in this case.

NOTE: The Commission files a complaint when it has reason to believe that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357).  The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad.  The FTC’s website provides free information on a variety of consumer topics.