On Wednesday, the FTC said it has halted the operations of three debt collection agencies as part of a new government initiative called, “Operation Collection Protection.”
The program is operated at both the federal and state levels and involved help from the Department of Justice, the Consumer Financial Protection Bureau, 47 state attorneys generals and state and local law enforcement.
“Debtors have certain rights and rogue collectors that step outside the law will face the consequences of illegal behavior,” FTC Chairwoman Edith Ramirez said in a press release.
Illegal debt collection companies started popping up at a record pace following the 2008 economic crisis.
“We are starting to see a growing number of calls from individuals who don’t owe the debt because they’ve either paid it off or didn’t have it in the first place,” Illinois Attorney General Lisa Madigan said during a press conference in Washington, D.C.
In many cases, customers are paying the unowned debt just to end the harassment they are receiving.
One couple in Illinois were running a “phantom debt collection scheme” by intimidating individuals to pay loans they did not owe. The couple agreed to pay a $6.4 million settlement.
Debt collection tactics are a top consumer complaint. In September, almost 30% of the complaints the CFPB received involved debt collectors.
The Fair Debt Collection Practices Act protects consumers from certain collection practices. For instance, debt collectors can’t call a person’s work, threaten harm or use profane language.
Debt collection agencies have already paid $88 million in fines for illegal collection practices in 2015.