05/16/2012 03:07 pm ET Updated May 17, 2012

Luebke Baker & Associates, FTC Settle For Collecting On Fake Debts

Americans that have been harassed for debts that they did not owe are about to see some justice.

The debt collection agency Luebke Baker and Associates, and defendants affiliated with Luebke Baker, have settled with the Federal Trade Commission (FTC) for $3.1 million in penalties for collecting on bogus magazine subscription debts, the FTC announced on Tuesday. Luebke Baker will now stop faking debts that do not exist and will tell consumers their rights under the Fair Debt Collection Practices Act.

The FTC alleges that debt collectors at Luebke Baker frequently pretended that they were attorneys or worked with attorneys, according to the FTC's complaint, and threatened to sue if the consumers did not pay. They also claimed that the non-existant debts were exempt from the statute of limitations and threatened to garnish consumers' wages, despite not having the legal authority to do so.

There are numerous complaints about Luebke Baker on online message boards. One online commenter wrote last April that Luebke Baker sent his girlfriend a bogus $500 bill for magazines. A Michigan woman wrote on a different message board that Luebke Baker tried to collect on debts from her by playing back a recording of her supposedly saying yes to a magazine subscription after they offered a free vacation and three free magazines.

Luebke Baker's website claims that "true customer service is a lost art" and "we are bringing it back" -- for those that want to collect on debt. "Your goal of eliminating debt is our goal," it claims.

Debt collectors are using increasingly aggressive tactics to collect on debts from struggling consumers, including lying, cursing and insulting consumers, according to a recent study by Marketdata Enterprises. Debt collectors even are setting up fake Facebook profiles and adding targets as friends to get their personal information and try to collect money from them, according to KDVR, the Fox affiliate in Denver.

Court judgments in consumers' favor against debt collectors do not guarantee a windfall either. A judge awarded Diana Mey, a woman harassed by a debt collection agency, $10.86 million -- but the debt collection agency that owes her the money has disappeared, according to ABC News.