The Consumer Financial Protection Board (“CFPB”) reports an explosion of complaints about so called phantom debt collectors and has even started suing some of the groups accused of operating them (Read more here). A phantom debt collector doesn’t worry about whether its tactics violate laws such as the FDCPA. These groups operate in the shadows under false names and addresses. They count on the fact that consumers who want to pursue them will not be able to identify and find the actual companies and individuals involved.
For example, one phantom debt collector operating out of the Buffalo, New York area, contacts consumers by telephone claiming to be a “mediator” that wants to assist with the resolution of the consumer’s debt. In fact, there is no mediator, just a debt collector trying to get the consumer to pay a debt that the consumer probably does not even owe. Consumers who agree to pay something are referred to a “payment processor” to wire payment. In most cases the phantom debt collector will not provide a mailing address to which a check can be sent. The “payment processor” is often just a company that gets a percentage of the payment for receiving the consumer’s money and sending it to the phantom debt collector. The goal of this scheme is to keep the actual individuals involved in unlawful debt collection anonymous and help them avoid ever being held responsible for their actions.
Phantom debt collectors cause real harm. Many consumers have been threatened with job loss or even jail time to get them to pay uncollectible debts and debts they do not owe. These tactics are unlawful, but it can be difficult and costly to pursue these bad actors. At Minnillo & Jenkins, we have successfully identified and pursued claims against phantom debt collectors, and we are pursuing the payment processors they hide behind.
If you receive a call from a debt collector, you can demand a written verification of the debt. If you dispute the debt in writing within 30 days of the debt collector’s initial communication, the debt collector is obligated to cease collection activity until it confirms the validity of the debt it is collecting. If the debt collector refuses to provide an address to which you can send a written dispute, or if it refuses to provide written verification of the debt, it may be a phantom debt collector. If you are considering paying such a debt collector, beware. You may even be paying a debt you do not actually owe.
Content provided by Christian A. Jenkins