U.S. Enabler of Indian Debt Collection Scam Settles with FTC

The Federal Trade Commission Tuesday announced a settlement with a California man and his companies that the agency alleges abetted a debt collection scam that operated out of India.

As part of the settlement, the defendants will turn over nearly all of their assets, which will be used for consumer refunds.

The FTC said that Varang K. Thaker and his two companies — American Credit Crunchers, LLC and Ebeeze, LLC — worked with callers in Indian offices to deceive and threaten consumers into paying debts that were not owed or that the defendants were not authorized to collect. The debt collection calls would target consumers who previously had received or inquired about online payday loans.

U.S. officials detailed the scam in February. Often pretending to be law enforcement or other government authorities, the callers would falsely threaten to immediately arrest and jail consumers if they did not agree to make a payment on a supposedly delinquent payday loan.  The FTC alleged that information submitted by consumers who had applied online for these loans found its way into the hands of the defendants, who used it to convince consumers that they owed them money.

The final order includes a $5.4 million judgment, roughly the total amount the scam garnered in two years.  The monetary judgment will be partially suspended due to the defendants’ inability to pay; the FTC noted that the sum of all of the assets of Thaker and the companies was around $170,000.

The settlement also bans the defendants from debt collection, and prohibits them from misrepresenting:

• that they are affiliated with the government or a non-profit group,

• any terms or conditions for buying any good or service,

• any aspects of the good or service, and

• their refund policy.

Specifically, the FTC charged the defendants with violating the FTC Act and the Fair Debt Collection Practices Act (FDCPA).  Among the violations, the callers:

• falsely told consumers they were delinquent on a loan, they must pay it, and the defendants had the authority to collect it.

• falsely claimed to be law enforcement authorities or attorneys.

• made false threats against consumers who refused to pay the alleged debts, including threats of arrest or imprisonment.

• harassed and threatened consumers so they often paid the alleged debts out of fear of being arrested or sued.