CFPB ropes payment processors into lawsuit against bogus debt collectors
The Consumer Financial Protection Bureau has filed suit against the operators of a robo-call “phantom debt” collection operation that used threats, intimidation, and harassment to trick victims into paying debts that they did not owe to the caller or, in some cases, did not owe at all.
In a civil complaint, the CFPB named seven bogus collection agencies and six different individuals identified as ringleaders of the scam.
In addition to the accused perpetrators of the fraud, the Bureau also named companies that processed payments made by victims to settle their non-existent debt to the collectors.
The payment processors include Global Payments and Electronic Merchant Systems.
In a complaint filed with the U.S. District Court in Atlanta, Georgia, the Bureau explained its inclusion of the processors in the legal action:
The payment processors facilitated the debt collectors’ large-scale fraud by enabling the debt collectors to accept payment by consumers’ bankcards when the payment processors knew, or should have known, that the debt collectors were engaged in unlawful conduct.
The payment processors, and the service they provided, gave the debt collectors an air of legitimacy and allowed the debt collectors to efficiently process a high volume of collections.
The CFPB suit also names Global Connect, the telemarketing company that sent automated messages to consumers as part of the scheme.
“Global Connect is alleged to have broadcast these messages even though the company knew they contained unlawful content,” the CFPB said in a press release.