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Fake Collectors Use Payday Lender Info To Scare People Into Paying Debts They Don't Owe

The Huffington Post  |  By Posted: 04/27/2012 12:15 pm Updated: 04/27/2012 12:15 pm

Debt Collectors

Another day, another story of debt collectors acting shady.

Some California residents recently started getting threatening calls from fake debt collectors about debts they didn't actually owe, according to a column by Paul Muschick at The Morning Call, a newspaper based in Allentown, Pennsylvania.

What's worse, Muschick writes, is that all of the people getting calls in California had recently applied online for payday loans, the quick-cash loan shops that often charge ruinously high interest rates to people in need. The information they submitted on their applications somehow found its way to the collection agencies, who then began trying to bully the borrowers into coughing up cash, authorities said.

Debt collectors are using these agressive and often illegal tactics more and more these days, according to a recent report from Marketdata Enterprises. The field is growing increasingly crowded and competitive, and it's getting harder for collection agencies to squeeze people for money when so many Americans are unemployed, in poverty, or eking out an existence from paycheck to paycheck.

As debt collectors employ ever more intrusive methods -- reaching out over Facebook, confronting debtors in the hospital, making vulgar threats and lying about the legal consequences of not sending in money -- the public is beginning to fight back.

The Federal Trade Commission received a record number of complaints about debt collectors last year, and there has been a recent surge of consumer lawsuits against collection agencies, with the plaintiffs accusing the collection agencies of violating federal law. In California alone, the number of lawsuits against debt collectors has jumped fivefold since 2005, according to the Sacramento Bee.

Yet even when the courts get involved, it can be difficult to enforce consequences on debt collectors. Diana Mey, a woman from West Virginia, recently won $10 million in a court judgment against a collection agency, but authorities are having trouble tracking down the collectors, and it's not clear at this point whether Mey will ever get her money.

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