Loan Intimidation Scams

Scam artists pretending to be debt collectors or law enforcement officials are terrorizing consumers and conning them out of millions of dollars. For this scam, callers contact consumers at all times of day and night, claiming they are from the FBI, fictitious government agencies such as the Federal Investigation Bureau, law firms, or other legitimate-sounding banks or companies.  The callers then state the consumers owe money towards a loan and need to pay immediately. 

While these victims may have applied for payday loans or may have received loans in the past, they owe no money to the callers. Somehow, the fraudsters have gotten hold of consumers’ information. The callers know information such as SSN, address, names of relatives or references, or the name of a lender that the consumer knows.  The fact that the scammers have this information makes consumers believe the callers are with a legitimate company who received a loan application. Also, these fraudsters intimidate people in a number of ways: using abusive language, threatening lawsuits or jail time, and threatening to call relatives or coworkers. 

Unfortunately, many consumers, even those who do not owe on a loan, have given money to these fraudsters so that the calling and harassing will stop. IC3.gov (the Internet Crime Complaint Center) states these scammers made a reported amount of more than $8 million last year. Since not all victims report their losses, it is likely that the amount is much higher. Because of the large amount of reported intimidation scams, the FTC has been making cases such as these a priority. According to recent FTC press releases, the FTC has halted the operations of two California-based debt collection agencies that were operating call centers out of India as well as running debit intimidation scams. The FTC charged the agencies with violating the FTC Act and the Fair Debt Collection Practices Act (FDCPA). Currently, the FTC does not know how the scammers obtained the consumers’ information. 

Clarity Services, Inc., a credit bureau servicing lenders in the non-prime market, is currently collaborating with the ITRC to investigate how these loan intimidation scams are occurring. The team is working to discover similarities that may point to the source of the data breach and attack the fraud problems that are identified. 

At this time, consumers can protect themselves from scams and harassing debt collectors by knowing their rights. The Fair Debt Collection Practices Act (FDCPA) details consumers’ rights and states what debt collectors are not allowed to do.  Below are some pointers if you ever deal with a suspicious or harassing debt collector:

• Remember, it is not a crime to be in debt.  Don’t let someone harass you into giving money. If you pay any amount, they may continue to harass you for more. 
• If you suspect the call could be a scam or fraud, ask for the caller’s and the company’s information, including phone number and address. Then request a written “validation notice” be sent to you. If the call is legitimate, you will receive a notice in the mail that contains the debt details and a copy of your rights under that FDCPA.  If the caller refuses to send you this information, hang up, and do not give any information about yourself.
• If you are being harassed by a debt collection agency, write to the company to demand that they stop calling you.  It will then be against the law for the company to contact you about this debt, except to notify you that they won’t contact you or that they will be pursuing legal options. 
• If you believe you were the victim of or the intended victim of a scam, report the call. Contact the FTC and your state Attorney General about the calls. 

Also, if a scammer has your personal information, you are at risk of being a victim of identity theft. Contact the ITRC toll-free at (888) 400-5530 if you have any questions about identity theft. The ITRC provides no cost victim and consumer assistance. 

“Loan Intimidation Scams” is a guest blog by Jenelle Nelson. Jenelle is a Fraud Analyst at Clarity Services, Inc. Clarity Services Inc, is a financial sponsor of the ITRC.