Crackdown: Feds Target Abusive Debt Collectors

— -- Authorities from the local to the federal level announced today an aggressive crackdown on “deceptive and abusive debt collection practices” that try and dupe hundreds of thousands of cash-strapped Americans out of their money using threats and lies, similar to those revealed in an ABC News investigation.

In one egregious recent example detailed by the Federal Trade Commission, a California company called BAM Financial purportedly lied to a consumer’s 84-year-old mother, saying the company had a warrant for the daughter’s arrest, and “later told the consumer they represented a bounty hunter and would have the sheriff serve her with process” -– all in a bid to force the woman to pay money she never owed in the first place.

“Being in debt is stressful enough for many Americans without also being subjected to intimidation and false statements,” Federal Trade Commission Chairwoman Edith Ramirez said in a written release. “Debtors have certain rights and rogue collectors that step outside the law will face the consequences of illegal behavior.”

The FTC, along with other federal agencies and state and local law enforcement authorities, today announced 30 new "actions," which the agencies said brought the “total number of actions taken” so far this year to 115 as part of Operation Collective Protection. BAM Financial is now subject to a temporary restraining order in the case involving the 84-year-old woman. An attorney representing BAM Financial, Michael Carras, told ABC News the company has been cooperating with the FTC, but said both the legal action and the temporary restrainer order were “surprise[s]” to the defendants.

“While the matter is pending before the court, the defendants believe it is premature to provide any public comment on the merits of the claims asserted by the FTC,” Carras said.

An ABC News investigation in 2012 spotlighted so-called phantom debt collectors based out of India who, armed with personal information about Americans who sought loans, threatened them with legal action if they didn’t give up cash.

At the time the FTC estimated that the callers had made at least 2.5 million calls, wringing more than $5 million from unsuspecting Americans. Some victims reported dozens of calls per hour.

One of the victims, Cindy Gervais of New Orleans, described the experience to ABC News in 2012.

“He more or less told me that if I didn’t pay, they were going to have someone on my doorstep to arrest me,” she said. “And that they were going to contact my place of business and tell them what kind of person I am.”

Investigators with the FTC eventually tracked the calls and payments, and were led to a California company run by an Indian-American named Kirit Patel. Patel maintained that he had no idea what the call centers in India were doing, but he pleaded guilty in 2014 to two counts of mail fraud and two counts wire fraud. He was sentenced to a year in prison this September.

Two years after the ABC News investigation, authorities said they are getting more aggressive in their pursuit of the scammers and aggressive debt collectors.

“My office receives thousands of calls and complaints each year from consumers who are victims of illegal debt collection tactics,” Illinois Attorney General Lisa Madigan said. “Through our partnership with the FTC and states across the country, we are putting scam operations out of business and protecting consumers from abusive practices by legitimate creditors.”