KHOU News (5/29/13) reports on a 76-year-old who fell victim to what appears to be a scammer, who phoned her claiming he was a debt collector and she owed money. Even though the victim did not have any debt, she paid the man $300, telling the reporter she was threatened with jail time if she did not pay. An investigation by the reporter found the man did not work for the company he claimed to, but the victim has not been compensated her $300.
Under federal law, it is illegal for debt collection agencies to threaten consumers with jail time if they fail to pay. In fact, it is illegal for debt collectors to threaten or otherwise intimidate debtors, including threats of violence against the person or his or her family, threats of jail time and threats to the person’s property.
It is also illegal for them to make harassing phone calls, call repeatedly, call outside of reasonable hours or call a person’s place of employment if the person has asked them not to. They are also not allowed to use vulgar language or claim to be attorneys or representatives from the state or a federal agency.
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Failure on the part of the debt collector to follow the law can result in stiff penalties and awards to the consumer. It will not erase any legitimate debt owed by the consumer.
In West Virginia, the attorney general reportedly reached a $700,000 settlement with five collection agencies, after alleging they were collecting on illegal Internet payday loans and further alleging that four of the agencies did not have a license in the state. According to the West Virginia Record (6/6/12), the companies will issue refunds to consumers.