Federal agents in Georgia arrested John Todd Williams, 48,
founder of debt collection agency Williams, Scott & Associates along with
six other employees on Tuesday morning for allegedly running a $4.1 million
debt collection scam that targeted more than 6,000 people across the United
The arrests stem from an investigation by the Federal Bureau
of Investigation, the U.S. Attorney's Office, the Federal Trade Commission and
the Consumer Financial Protection Bureau. It appears to be the first time federal
authorities have taken coordinated action against debt collectors, and could be
the beginning of a broader crackdown.
Prosecutors say employees of the company would routinely
bully, threaten and trick thousands of victims by falsely calling themselves a
"detective" or an "investigator" for local law enforcement
agencies. Typically, they would call borrowers and say they had committed a
crime such as "check fraud" and that if they failed to make immediate
payment, a warrant would be issued for their arrest.
From 2009 until April of this year, the debt collectors
claimed to be working with the U.S. Justice Department or the Marshals Service
and used legal terms that sounded official but were actually meaningless to try
and coerce consumers, according to the complaint.
Debt collectors have been using increasingly aggressive
tactics in the years since the 2008 financial crisis. Under federal law, debt
collectors are barred from harassing consumers by repeatedly calling them or
using threats to pressure them to pay.
In 2012, the Consumer Financial Protection Bureau was given
authority to oversee and regulate the largest U.S. debt collection agencies.
The consumer agency's auditors can march into the offices of
large debt collectors to ensure they're giving consumers a fair shake. They can
evaluate debt collectors to make sure they are clearly and accurately
identifying themselves, truthfully disclosing the amount of debt owed, and not
attempting to collect debt that doesn't exist or has been paid off.
An estimated 1 in 3 adults with a credit history -- or 77
million people -- are so far behind on some of their debt payments that their
account has been put "in collections," according to a recent
study by the Urban Institute. The debt in collections ranged from as little as
$25 to a whopping $125,000. But the average amount owed was $5,200.
here to access the full article on CNNMoney.