Phantom debt collection is a scam that comes in several variations. But each variation has a common element –  pressuring people into paying debts they don’t owe or that the debt collector has no legal right to collect.

Using threats and intimidation to collect a debt is a violation of  the Fair Debt Collection Practices Act (FDCPA) and the Massachusetts Consumer Protection Law (General Laws Chapter 93A). Any debt collector who violates the FDCPA or Chapter 93A and who is successfully sued can be ordered to pay money damages to the person who files the lawsuit. There is little doubt that trying to collect a debt that isn’t owed or which the debt collector has no right to collect is an unfair or deceptive practice under both federal and state law.

The Federal Trade Commission (FTC) recently obtained court orders permanently banning 13 Georgia-based companies and their principals from the debt collection business. The case is a good example of the kind of illegal practices used by debt buyers who try to collect phantom debts.  According to the FTC , the defendants falsely told people they had committed a crime by not paying a phantom debt; that they would to jail if the debt wasn’t paid; and that they would also be sued and have their wages garnished. The threats worked and many people paid debts they didn’t owe. In some cases, the debt was never owed or had already been paid. In other cases, the defendants did not own the debt and therefore had no legal right to collect it.

Below are the names of the corporate defendants named in the FTC’s complaint:

Phantom debt collection is a growing problem. If you paid a debt to any of these companies, you might be entitled to receive compensation from the FTC. Contact the FTC or my office if you have any questions.

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