In business the element of borrowing and lending is quite essential in the daily operation of any firm. The process of borrowing and lending eases the capital and cash burden on an entity. However, bad debts eat into profits, becoming an unnecessary expense. Hence necessitating business’ need for debt collection services. But what happens when a debt collection agency tricks consumers into paying debts they didn’t owe?
Using fictitious names, numbers, data and social security information, these fraudulent agencies issue threats of being sued, bank accounts being frozen as well as jail time to innocent parties in an effort of making them pay a fictitious debt. These false claims by the agencies amount to violations of the Consumer Financial Protection Act and the Fair Debt Collection Practices Act.
On April 8th 2015 the consumer Financial Protection Bureau (CFPB) announced that it had filed a lawsuit against the ringleaders of a robo-call phantom debt collection operation, their companies, and their service providers? In a statement the CFPB Director Richard Cordray said, “We are taking action against the many parties that allegedly contributed to this phantom debt collection operation. The ringleaders of the scheme, the telemarketing company that broadcast millions of robo-calls, and the companies that processed the payments should all be held accountable for taking advantage of vulnerable consumers.”
The defendants; Marcus Brown and Mohan Bagga are allegedly to have been the leasers of a group of individuals and entities that was trying to. Using a telemarketing firm, Global Connect. They are alleged to have threatened, harassed, and deceived consumers in order to collect phantom debt. In a nutshell the alleged scheme was carried out in the following elaborate manner.
1. Harassed consumers with threatening robo-calls
2. Collecting or attempting to collect phantom debt
3. Threatening legal action against consumers
4. Deceiving consumers to collect debts
In an effort to fight phantom-debt collectors tough legislation is being drafted to get rid of scam agencies. Consumers and businesses still have to take a proactive approach by keeping personal data secret. Taking steps to authenticate collectors, track your debts, checking the paperwork and getting acquitted with the Fair Debt Collection Practices Act.
It is a good idea to get a good merchant account servicing company that provides payment processing services for merchants of all sizes. emerchantbroker.com has a good reputation working with traditional business types as well as high risk merchants that are a bit hard when it comes to getting approval? The company has worked with tons of collection agencies providing impeccable payment processing solutions.