Bureau charges robo-callers with phantom debt collection

By Katalina M. Bianco, J.D.

The Consumer Financial Protection Bureau has taken steps to halt what it charges to be a phantom debt collection scheme cooked up by the scheme’s operation, their companies, affiliated individuals, and service providers. The CFPB’s complaint includes the scheme’s alleged leaders, Marcus Brown and Mohan Bagga.

The bureau is alleging that the scheme involved the use of automated telephone calls, deception, and threats to induce consumers to pay debts that the operators did not own or, in some cases, that the consumers did not actually owe. The CFPB did not estimate the amount of money that was collected other than a reference to “millions of dollars in ill-gotten profits.”

According to the CFPB’s complaint, the persons involved in the scheme used aliases while threatening consumers with arrest, wage garnishment, and “financial restraining orders.” The schemers bought consumers’ personal information from debt brokers or lead generators, according to the bureau, providing them with consumers’ birthdays, Social Security numbers, or other information that allowed them to appear legitimate.

The CFPB specifically alleges that the scheme operators: made multiple threatening robo-calls to consumers that included a call-back number that subjected consumers to threats that included criminal prosecution; misrepresented the operator’s legal right to collect debts; threatened arrests or wage garnishments the operators could not carry out; and used fake business names to create the impression that consumers would be sued if they did not pay.

The bureau said that the scheme was made possible by the involvement of a telemarketing company and four different payment processors, all named in the suit. The telemarketer originated “millions” of automated telephone calls, while the payment processors were essential to the scheme’s ability to accept debit and credit card payments, the CFPB said.

According to the CFPB, the payment processors ignored numerous red flags that should have alerted them to the illegality of the scheme, including consumer disputes that described the scheme and difficulties in communicating with the scheme’s operators.
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