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FTC shuts down debt-collection company

The Federal Trade Commission has shut down another operation for defrauding vulnerable Americans who are saddled with debt. Following the economic hardships of the recession and rise in personal bankruptcy filings, more companies have preyed on consumers who are unsure of their rights. The latest companies to be shut down, American Credit Crunchers and Ebeeze, both run by one man, had defrauded more than $5 million from victims over the past two years.

A U.S. District Court stopped the operation of the companies after a recent request from the FTC. The owner and his companies are charged with violating the FTC Act and the Fair Debt Collection Practices Act.

According to the FTC, workers in India would call Americans and threaten them to make payments on debt they didn't owe. One victim recounted her own tale of how she received a phone call telling her that she would be arrested and suffer wage garnishment if she didn't pay an outstanding bill of more than $730. The caller claimed to be with the "Federal Department of Crime and Prevention," which does not exist.

The FTC says that more than 8 million such calls were made since 2010, resulting in at least 17,000 transactions processed. According to the charges, Social Security and bank account numbers were obtained from payday lenders to target victims. The company both made up debt and found debts that it was not authorized to collect.

The director of the FTC's consumer protection bureau said the whole operation was fraudulent. Legitimate debt collectors provide information in writing, as well as steps to follow if a person believes they do not owe the debt.

According to the Consumer Financial Protection Bureau, more than 30 million Americans have outstanding debts. The FTC and state attorneys general have received more than 4,000 complaints since 2010 about fraudulent debt collection calls.

Source: Huffington Post, "FTC Cracks Down On Indian Call Center, Fraudster Debt Collectors," Catherine New, Feb. 21, 2012

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