Recently I read an article written by the BBB indicating they are being overwhelmed by the number of Pay-Day loan scams. Supposed “debt collectors”, generally with heavy foreign accents, have been calling individuals and trying to collect on debts that weren’t really owed. The collectors calling have a vast amount of personal information about the victims of this fraud and are using the typical scare tactics to pressure payment such as threats to sue, threats to garnish wages, threats to arrest, etc. For further information the article can be found at http://www.turnto23.com/news/25430839/detail.html

We at Krohn & Moss have had no shortage of panicked telephone calls from potential clients stating they were receiving these types of calls. Some of the unsuspecting victims have provided sensitive bank account information and set up payments to these scam artists in hopes of avoiding the potential “jail time / felony counts, etc.” that were wrongfully threatened. As the article indicates, any legitimate company that is trying to contact you to collect a debt should send you written verification of the alleged debt within 5 business days of first contacting you. Indeed, Section 1692g of the FDCPA states:

(a) within five days after the initial communication with a consumer in connection with the collection of any debt, ad debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing —
(1) the amount of the debt;
(2) the name of the creditor to whom the debt is owed;
(3) a statement that unless the consumer, 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 debt collector;
(4) a statement that if the consumer notifies the debt collector in writing within the 30-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and
(5) a statement that, upon the consumer’s written request within the 30-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

If you have been the unfortunate target of these scammers, demand the information listed above. If a company fails to provide it or refuses to give pertinent information about the debt, including their address and contact information, it could be a scam. Individuals should be extremely cautious not to give their bank account or any other personal identifying information out over the phone without having something in writing from a reputable company.

The BBB is a valuable resource in determining the reputation of a company. If you think you are the victim of a pay day loan scam, unfortunately many law firms are unable to help you as they cannot determine who the proper defendant would be. What’s more, even if you could pin down the specific collector your odds of ever being able to collect on a judgment are unlikely as many of the companies have no assets. As the article stated, you do have recourse. You can file a complaint with the BBB, the FTC (www.ftc.gov) or with your State’s Attorney General’s Office (I would do all three). Although this sounds appealing, my fear is that these entities are quickly becoming overwhelmed with the sheer amount of complaints and may not have the resources to process each claim in a timely manner. The most important thing for a consumer to do is recognize these scams early, determine the validity of the company, and the debt, and avoid being pressured into a quick payment – In the vast majority of circumstances, there is noting criminal about running into hard times and being unable to pay a debt. The Scammers use the intimidation and threats to scare you into payment – don’t get caught with your guard down. Demand information in writing, confirm the company and the debt are legitimate, and then make the determination if you should pay.