Many ― but not all ― debt collectors working for loan sharks are alleged humans who do the bidding of the dark side of the force.  I have written about abusive debt collectors several times, in unflattering terms.  It turns out that I’m not the only one who has noticed their abusive tactics.  The feds are paying attention too.

I.  The Abusive Tactics Epidemic

A.  Criminal Charges Against Collectors

Writing in the November 18, 2014, issue of the ABA Journal, Martha Neil reported:

A Georgia-based debt-collection company, its owner and six employees have been criminally charged in what is described by federal authorities as a $4.1 million national scheme that took advantage of more than 6,000 people.  U.S. Attorney Preet Bharara of Manhattan, who is overseeing the case, says a larger investigation of “an absolute epidemic of abusive debt-collection practices” is ongoing by the Consumer Financial Protection Bureau, the Federal Trade Commission, the Federal Bureau of Investigation and federal prosecutors in his own office.  This appears to be the first time these agencies have coordinated on such a probe, which could signal that a major enforcement effort is underway, reports CNN Money.  The Atlanta Journal-Constitution, Newsday (sub. req.) and Reuters also have stories.  “[R]uthlessly persistent” collectors at Williams, Scott & Associates in Norcross, Georgia, bullied thousands of people nationwide into paying millions between 2009 and 2014, sometimes even when they didn’t owe money, said Bharara.  Collectors falsely claimed affiliations with government agencies and threatened people with arrest or other enforcement action, he said.

Collectors lied!  I’m shocked, shocked.  Actually, I’m not shocked because I’ve had clients tell me that collectors have threatened to jail them for not paying a debt.

The FBI has an article about the Williams, Scott & Associates case, that provides much more detail about the scope of the abuse.  I mention this to emphasize the fact that the FBI really is interested in going after abusive collectors.  However, they cannot do so unless the victims report the abuse.  Therefore, if you’ve been told by a debt collector that you’re headed for jail unless you pay a debt, call the FBI and the U.S. Attorney’s Office, and tell them about it.  If enough people complain, they will act.
Continue Reading

What’s in your wallet?  It’s a loan shark!  That’s how many people feel when they consider their ever-increasing debt burden.  Unfortunately, many of those same people continue to feed the shark by patronizing loan sharks.

John Oliver recently skewered loan sharks on his Sunday show.  Jon Healy of the L.A. Times published an article on

On January 30, 2013 Shan Li of the L.A. Times reported:

Nearly 44% of American households are one emergency away from financial ruin.  That means they don’t have enough savings to cover basic living expenses for three months if something unforeseen happens such as losing a job or falling sick, according to a recent study by the Corporation for Enterprise Development.  Almost a third of Americans have no savings account at all. . . .  Many people living precariously have jobs.  About 75% are working full time, and more than 15% are earning middle-class incomes of more than $55,000 a year, according to the report.  But despite steady jobs, many of those surveyed are surviving paycheck to paycheck, trying to cope with the recession’s aftermath; one emergency could tip them over “the edge of financial disaster.”  Possible reasons for their lack of savings?  Experts say many factors could be at play, including stagnating wages, rising prices and high credit card debt.

It’s worth noting that a fairly large number of employed people are underemployed, which gives a partial explanation for the precarious position of many people.

How do folks deal with an income shortfall?  Some tap into their credit cards, and increase their debts.  Then they use other credit cards to pay the new credit card debt, and eventually things spiral out of control.

However, a growing number of people are turning to loan sharks for extra cash.  The breathtakingly high interest rates on Payday loans, Cashcall loans, and loans from Don Corleone guarantee a bleak financial future.  In the April 24, 2013 Los Angeles Times, Alejandro Lazo reported:

Payday loans often trap consumers in a cycle of debt, a new report by the federal government finds.  The Consumer Financial Protection Bureau found that the average consumer took out 11 loans during a 12-month period, paying a total of $574 in fees — not including loan principal. A quarter of borrowers paid $781 or more in fees.
Continue Reading