Officers of a firm that allegedly helped facilitate $200 million in fraudulent charges have settled with the FTC, after paying a fine of $15,000 and promising not to do it again. The CEO and the president were individually fined for a grand total of $22.65 million, but the judgments were stayed based on their inability to pay.

Anything wrong with this picture?

At least that’s what I was thinking when I read the latest enforcement action by the FTC against the former president of a company that, according to the FTC and seven state attorneys general, “processed unauthorized debits on behalf of deceptive telemarketers and Internet-based schemes that were violating the FTC’s Telemarketing Sales Rule and state and federal consumer protection laws.”

The firm, Your Money Access, LLC, helped clients process more than $200 million in debits and attempted debits from consumer’s accounts. Nearly $70 million of those debits were rejected or returned (presumably because they were unauthorized or consumers disputed them) and, in cases where the scheme was successful, merchants often allegedly sent “relatively worthless items” – or nothing at all. 

In a recent post, I described how small credit and debit card charges you don't recognize can be the sign of a bigger problem. This case again illustrates why it’s important to monitor your credit card accounts (and if you use a debit card, your bank account) frequently, and dispute suspicious charges quickly.

(This case was settled with the FTC without admitting any wrongdoing.) 

Gerri Detweiler – Personal finance author and Credit Advisor for Credit.com, Gerri contributes budgeting, debt recovery and savings information online. She is also the co-author of Reduce Debt, Reduce Stress: Real Life Solutions for Your Credit Crisis.

For a year now, we've been getting complaints in the Credit.com forums about fake payday loan debt collectors. So I wasn't surprised when I read the announcement this week by Illinois Attorney General Lisa Madigan warning Illinois residents to “be on the alert for scam artists posing as collectors of payday loan debt. The scammers call consumers and threaten them with legal action unless the victims authorize payments from their bank accounts.” Her office has received numerous complaints.

These are not your normal debt collection calls. In many cases, these collectors are very aggressive. Here are some of the threats reported on our forums:

“…we would have to appear in court at 11:00am tomorrow morning, we would be charged with internet fraud, would be put in jail, could be sentenced to 4 months in prison, etc.”

“…said that if I didn't pay $1,095.87, the police was going to come to my house and arrest me and take me to jail.”

“…wont give me company name and he tried to cuss me out…”

 Just to be clear, these are not collectors trying to collect legitimate debts. Most of the complaints on our forums, and to the IL AG involve consumers who either never took out a payday loan, or who may have initiated one but never actually secured the loan. In some cases, the "collector" has detailed information about the victim – such as name, address and Social Security number – which makes the debt appear to be real.

Here's what to do if you get a call like this:

• Ask the collector for  the name and address of the collection agency for which he or she works. Then ask him to send you written information about the debt.  Any legitimate debt collection agency will do this because it's required under the federal Fair Debt Collection Practices Act.
• If the caller won't give you this information, hang up. If a phone number is available through caller ID, report the call on our forums and to your state attorney general and the FTC.
• Don't let one of these companies scare you into making payments if you're not sure you owe the debt. In most cases, collectors must first take you to court and get a judgment before they can go after your wages or property. (If you live in Minnesota, though, read this warning.)

By the way, you can't be arrested simply because you can't afford to pay a debt. (Warning, though, there are cases where consumers are jailed in connection with debts because they failed to appear in court after a summons was issued.)

The Illinois Attorney General’s office says the bogus debt collectors they’ve heard about use a variety of names, including: Morgan & Associates, Federal Bureau of Investigators, DNR Recovery, DNI Recovery, Legal Accounts Association, Department of Law and Enforcement, CashNet USA, America Legal Services, Quick Cash, and ACS. If you hear from any of those companies, be sure to report them immediately to your state Attorney General’s office and the Federal Trade Commission.

And share your experience with us on the Credit.com forums. 

Image: Abu Badali

Before you read this post, check out the Web site for Esteemed Lending

What did you think?

I think it’s a great example of the type of Web site we get complaints about every week in the Credit.com forums. Fortunately this one won’t rip people off like the ones we’ve heard about. That’s because it’s a fake Web site created by the Federal Trade Commission to try to show consumers how convincing advance fee loan scams can be.

We’ve written about advance fee loan scams on our site and blog before. Here are just a few of the more recent complaints we’ve received from would-be borrowers who were taken:

I sent all the money I had in my bank to them- with the assurance that i would have the 50 grand... So they said they would refund my $2160. (My note: No refund was forthcoming.)

My wife and I were victims of the same scam. We Western Unioned them almost $3000.00 for 'loan insurance'. After we didn't receive our $10,000.00 loan that they told us we qualified for, we of course called them to ask what the problem was and they wont take my calls. Now there number is disconnected.

The FTC has warned you, and we've warned you. No matter how convincing these sites may seem, there are no "private investors" or "private lenders" eager to make high-risk loans to consumers. Please, please don't send an upfront fee to one of these companies.

Gerri Detweiler – Personal finance author and Credit Advisor for Credit.com, Gerri contributes budgeting, debt recovery and savings information online. She is also the co-author of Reduce Debt, Reduce Stress: Real Life Solutions for Solving Your Credit Crisis.