Following an investigation, seven debt collectors have been arrested for allegedly running a $4.1 million debt collection scam. 48-year-old founder of debt collection agency Williams, Scott & Associates, John Todd Williams, and six other employees have been arrested for the scam that targeted more than 6,000 people across the country.
Working Together to Crack Down on Debt Collectors
This is the first time federal authorities at the Federal Bureau of Investigation, the U.S. Attorney’s Office, the Federal Trade Commission, and the Consumer Financial Protection Bureau have coordinated an investigation and action against debt collectors. This could mark the beginning of an even larger crackdown movement. “We are far from finished looking at the seedy side of debt collection,” said Preet Bharara, the U.S. Attorney in Manhattan. “It affects too many people.”
Debt Collector Scam
According to prosecutors, from 2009 until April of this year, employees at the company would pose as “detectives” or “investigators” at local law enforcement agencies and bully, threaten, and deceive thousands of victims into thinking they had committed crimes such as “check fraud.” They would call the victims, demanding that if they failed to make an immediate payment an immediate warrant would be issued for their arrest. The debt collectors would often claim to be working with the U.S. Justice Department or the Marshals Service while employing legal terms to sound official.
“This scheme took advantage of our poorest and most vulnerable citizens from all fifty states,” said George Venizelos, the FBI assistant director in New York. “The defendants were nothing more than bullies with bogus badges.”
Aggressive Tactics of Debt Collectors
Federal law bars debt collectors from harassing consumers through repeated phone calls or pressure to pay.
In 2012, the Consumer Financial Protection Bureau was given authority to regulate U.S. debt collection agencies. This gave them the authority to go into the offices of debt collectors to ensure they are being fair to consumers.
Source: CNN Money, Federal agents arrest debt collectors in crackdown, November 18, 2014