Strong-arming debtors, the latest scam

The State Department of Banking said today it has been receiving 40 complaints a month for almost six months of debtors being contacted by people posing as debt collectors demanding payment under the threat of arrest and prosecution.

“This is kind of a new low,” said Howard Pitkin, the state’s Banking Commissioner.

The scammers, which appear to be located offshore, are gaining information on people who apply for payday loans on line. They then call the debtor and harass them at work, at home and sometimes contact neighbors. They even say they are going to send federal agents to the person’s home or office to arrest them for fraud.

The faux debt collectors claim to have purchased the loan but there’s no evidence of that, the department found, as those that have actually paid the money have continued to be contacted.

One of Department of Banking staffer had to talk to a victim’s boss to help the person keep a job after phone calls poured into the business, the department revealed. Another woman was so concerned after receiving a call, she turned herself into police.

The Department is investigating how the names are getting out and has discovered at least one instance of hacking. The group or groups making the calls all appear to be based outside the U.S.

“You got to push back and try to get their name and where they’re located,” Pitkin said, when receiving a debt collection call. “If they refuse to give that information, you know you’ve got a scammer. After that, stop talking and report the call to local law enforcement.”

You should also contact the Banking Department’s Consumer Affairs Division, at (860) 240-8170, or Toll-free, at 1-800-731-8225.

The scam itself is another sign of the difficulties in this economy as people continue to struggle to pay bills and find less opportunity for pay increases and job advancement.

Pitkin said the department is holding a meeting to discuss ways to find alternatives to payday loans in the state. For now, he encourages people to visit small banks and credit unions to discuss options there.

Also, people can call 211 for information on finding food pantries and assistance with some basic bills, like energy and heat.

Rob Varnon