WASHINGTON (CN) - Announcing 30 new actions against abusive debt collectors Wednesday, the Federal Trade Commission said it is coordinating efforts with states on these practices for the first time.
Addressing reporters from its D.C. headquarters this afternoon, the FTC said it has joined forces with a coalition of other federal, state and local law enforcement agencies to tackle illegal debt collection practices.
Operation Collection Protection has so far spurred 30 new law-enforcement actions against collectors who harass people with abusive phone calls, and threaten litigation, public humiliation, wage garnishment or even arrest, the agency said.
Joining FTC chairwoman in announcing the operation were Illinois Attorney General Lisa Madigan and Minnesota Commerce Department Commissioner Mike Rothman.
The trio noted a sharp uptick in unlicensed scammers using abusive tactics to try to collect phantom or zombie debt from people who owe nothing, or have already paid their debt off.
"There are too many people haunted by collectors of phantom and zombie debt, and unfortunately for them Halloween really never ends when they're targeted by these scammers," Madigan said.
The scam involves the sale of consumer data that contains personal information, such as bank account numbers, Social Security numbers or place of employment, Madigan said. Scammers then start making harassing and threatening phone calls.
"Many people, even if they actually owe no money at all, end up paying hundreds or thousands of dollars just to get these people to go away," she added.
The FTC cited 115 total actions taken against abusive debt collectors so far this year, by more than 70 law-enforcement agencies across the nation, as part of the recent initiative.
Madigan said the agency settled with Chase Bank for $150 million, $50 million of which will be paid back to consumers, and the bank will need to reform its debt-collection practices.
An FTC investigation of Chase revealed that it sometimes collected credit card debt from the wrong customers, or collected incorrect amounts, Madigan said. Additionally, when Chase sold incorrect debt amounts to other debt buyers, debt collectors went after consumers again for the same debt, Madigan said.
The FTC specifically touted five new enforcement actions against debt collectors it says are engaged in illegal practices.
While one of the complaints was filed under seal, the FTC said two other operations are already in settlement talks.
The FTC and Madigan said their settlement with K.I.P. LLC involves "a married couple who ran a phantom debt collection scheme based in Aurora, Ill."
They "agreed to a $6.4 million judgment, and a ban on working in any debt collection business," the FTC said in a statement.
The FTC coordinated its National Check Registry settlement with the New York Attorney General's Office.
"With the new settlements, the FTC has now secured final judgments in seven cases so far in 2015, placing 33 defendants under strict federal court orders, securing over $88 million in judgments, and banning 24 defendants from working in debt collection," the FTC said in a statement,
BAM Financial and Delaware Solutions face temporary restraining orders.
The FTC's Ramirez notes that the new national coalition includes the Department of Justice, the Consumer Financial Protection Bureau, 47 state attorneys general and 17 state regulatory agencies.
Ramirez said the agency receives more complaints about the debt-collection industry than any other, with 280,000 complaints filed last year.
Ramirez warned "rogue collectors" that the FTC's announcement would not be the end of the initiative or the agency's vigilance regarding debt-collection abuse.
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