Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Feb 22, 2012

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Authorities from the Federal Trade Commission (FTC) announced a successful first-of-its-kind investigation that led to the thwarting of a multi-million dollar payday loan scam that sucked money out of U.S. citizens on threat of arrest and use of intimidation.

 

The scam performed was one put on by callers from India who obtained personal data from payday loan websites, said Steven Baker of the FTC, according to The Associated Press.  They then placed more than 20 million calls over the last two years, and demanded between $300 and $2,000 per phone call, according to an FTC press release.

 

 

California-based businesses, American Credit Crunchers LLC, and Ebeeze LLC, are allegedly involved in aiding these international callers, and has since had their accounts frozen by the FTC.

 

The FTC received upwards of 4,000 complaints about the payday loan debt-collection scam. The complaints claimed that the callers were very aggressive, threatening, and foul-mouthed, some of whom identified themselves as agents of a nonexistent government department called the Federal Department of Crime and Prevention, reported the AP.

 

JanLaree Dejulius, and employee at a Las Vegas university’s office, claimed she received a call from one particular scammer who called himself Officer Black. Black knew that one of Dejulius’ relatives took out an online payday loan, and failed to pay it back. The caller threatened Dejulius with arrest if she didn’t pay on her relative’s behalf.

 

“I said, ‘Yeah, I’ll pay you—whatever it takes (not to get arrested),” said Dejulius at a news conference in Chicago, according to the AP. “I consider myself savvy, but I fell for it.”

 

The 57-year-old university worker eventually forked over $763 to this scam ring.

 

Others were faced with different forms of intimidation, ranging from threats of lawsuits to threats of calling borrowers’ bosses and requesting payment from them on the borrowers’ behalf.

 

Baker advises anybody who is contacted by a debt collector to request a written notice with debt amounts and names of payday loan creditors. The FTC official told the AP that debt collectors never have the authority to arrest anyone.

 

Dejulius, who has since learned from her experience and wishes to stop others from undergoing something similar, advises victims not to give in.

 

“Call them on it,” she told the AP. “Call their bluff if you know you haven’t taken out a loan.”

 

With several thousand calls hitting U.S. citizens, such an enormous amount of international calling activity is something authorities claim they have never seen before. They attribute such activity to the fact that international phone calls are cheaper now than they ever have been before, unlocking the possibility for scammers to afford such an approach.

 

While this particular scam has been caught and stopped by the freezing of funds, authorities fear there are other scams by other groups that are currently targeting payday loan debtors.

 

“We think it’s just the tip of the iceberg,” Baker told the AP.