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Feds Crack Down On Phantom Debt Collection Schemes

The Federal Trade Commission (FTC) recently began Operation Collection Protection, a plan to shut down phantom debt collection schemes running rampant across the country. These schemes trick consumers into paying debts that they do not know.

So far, the FTC has filed a lawsuit against six companies and three individuals. These people and entities used businesses with names like Stark Law, Stark Recovery, and Capital Harris Miller & Associates to run a boiler room operation that harassed consumers nationwide into paying off debts that did not belong to them. They would also sell fake debts to debt collection companies, that would also begin hounding consumers for these fake debts.

The FTC claims that this scheme has earned the companies over $3.8 million since 2011. While the companies were mostly based in the Midwest and in California, they were able to convince over 1,000 people around the country into paying off fake debts.

Often, the scammers received a consumer’s information when he or she applied for an online payday loan. Many of these websites offered loans for people with bad credit or no credit, and promised quick and easy cash. However, these websites were also fake, and were created to steal consumer information from the internet.

People who were contacted by these companies reported that the callers told them that they had an outstanding debt, and would be hit with a lawsuit if they did not pay. Consumers also reported that the debt collection companies contacted family and friends in order to convince that person to pay off the phantom debt. In many cases, consumers agreed to make a payment just to get the harassment to stop.

Phantom debt collection is a growing problem across the country. Last year, the FTC received over 900,000 complaints about debt collection practices, many of which involved fake or phantom debts.

If you have been contacted about a debt that you do not believe you owe, you should ask the debt collector to mail you written proof of the debt. Legitimate debt collectors must provide this information to consumers. Additionally, consumers should check their credit reports for any evidence of the debt. If debt does not appear on any of the person’s credit reports, then it is probably not legitimate.

After you request verification of the debt or review your credit report, contact the attorneys at Loan Lawyers. We can help you determine whether or not you owe the debt, and if you do, we can help you negotiate a resolution. If you are being targeted by a debt collection scam, we can also help you fight back by filing a claim against the phantom debt collector.

For a free, no-risk consultation about your legal rights and options, contact Loan Lawyers today by calling (888) FIGHT-13 (344-4813).