Attorney General Ford, FTC, State and Federal Law Enforcement Partners Announce Nationwide Crackdown on Phantom and Abusive Debt Collection

October 6, 2020

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‘Operation Corrupt Collector’ targets debt collectors trying to collect on non-existent debts using illegal scare tactics

Carson City, NV – Nevada Attorney General Aaron D. Ford, along with the Federal Trade Commission (FTC) and more than 50 federal and state law enforcement partners, announced a nationwide initiative to protect consumers from phantom debt collection and abusive and threatening debt collection practices. The initiative, called Operation Corrupt Collector, includes enforcement actions brought by the FTC, three federal partners, and partners from 16 different states against debt collectors engaged in these illegal practices.

“Protecting consumers from fraud and other illegal behavior has been a priority for my office since day one,” said AG Ford. “So far this year, the Federal Trade Commission’s Consumer Sentinel Network has received more than 85,000 consumer reports related to debt collection, nearly 45% of which were related to debts the consumer did not owe or other abusive and threatening debt collection practices. My office is proud to be a part of this national effort to educate consumers about debt collection and provide much-needed resources.”

“For many years, we’ve been working with our law enforcement partners to crack down on illegal and abusive debt collectors,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “At a time when many are under financial stress, our coordinated actions today show that we’re continuing the fight against collectors who threaten people and try to collect debts they don’t owe.”

Operation Corrupt Collector includes five cases filed by the FTC, two cases filed by the Consumer Financial Protection Bureau and three criminal cases brought by the U.S. Department of Justice and U.S. Postal Inspection Service. States reporting actions as part of the operation include Arizona, California, Colorado, Connecticut, Florida, Idaho, Illinois, Indiana, Massachusetts, New Mexico, North Carolina, North Dakota, New York, Ohio, South Carolina, and Washington.

In each of the new FTC cases announced today, the companies claimed to be collecting on debt that they cannot legally collect, or that people do not actually owe. With the availability of contact information on the Internet, debt collectors can conveniently contact consumers using automatic telephone dialing systems that repeat artificial or prerecorded voice messages. These types of calls are known as “robocalling.” Robocalling has made it easier for debt collectors to employ abuse debt collection tactics.

In two of the cases, the companies made robocalls to individuals, telling them that they have been sued, or soon will be, if they do not pay up. In the third case, the companies called people claiming to be law enforcement officials or attorneys — scaring people with threats of arrest at their workplace, prison, or suspension of their driver’s license if they did not pay right away.

Have you received a collection call about a debt you do not recognize? Before you pay:

Find out who’s calling. Get the name of the collector, the collection company, its address, and phone number;

Get “validation” information about the debt. Within five days of first contacting you, debt collectors must “validate” or tell you the amount of the debt, the name of the current creditor, and how to get the name of the original creditor;

Don’t respond to threats. When scammers threaten to arrest you, suspend your driver’s license, or call your employer if you do not pay immediately, hang up and report the collector to the FTC;

Do your own detective work. Check with the original creditor. Is the debt yours? Did they sell your debt or hire a company to collect it? If so, is the caller the original creditor’s collector? These are all important questions to consider; and

Dispute the debt. If you think you don’t owe some — or all — of the debt, dispute it with the collector by mail or online. Even if you got validation information.

If a consumer is being contacted by a live person, robocall or in writing by a debt collector and wishes the debt collector to stop, the consumer can notify the debt collector in writing that he or she desires the debt collector to cease further communication. With minor exceptions, the debt collector is required to honor the request to not communicate.

In addition to law enforcement actions, state and local consumer protection agencies across the country are joining the FTC in rolling out new information to help consumers know their rights when it comes to debt collection and what steps to take if they receive a call trying to collect on a debt that they do not recognize. The FTC has also created a new online dashboard with information about reports received from consumers on debts not owed and abusive and threatening collection practices.

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