Aggressive debt collectors might have you handing over your money for loans you may not even owe.
Before you settle any debt, there are a few key questions to ask to protect yourself.
John Abascal of Meriden thinks he shelled out $200 for debt he really didn’t owe.
“They got me,” said Abascal of several companies he believes were in cahoots to get the undeserved payment. “Proceeded to tell me that I owe $450.00 for a Payday Loan that I took out in 2011.”
Abascal said he started getting intimidating phone calls and voicemail messages threatening to take him to court if he didn’t make payment arrangements with a company called ADR Associates, also known as Alternative Dispute Resolution, a company based out of Texas.
An ADR Associates representative told Abascal he was collecting on behalf of a Payday Loan company called C.P. Investors, based in Florida, that had bought the loan debt.
“He said it was ADR Associates, they were attorneys,” explained Abascal. “Said his name was Clyde.”
Abascal said although he couldn’t remember taking out a Payday Loan, Clyde told him the debt was now up to $630 because of fees and interest, but they would settle for $450. Clyde also said that if he didn’t pay on time, Abascal would ultimately end up paying more money because of court costs and attorney fees.
Although Abascal said the conversation was fast and aggressive, he added, Clyde never did say the name of the original company he had supposedly owed.
Abascal said he was "scared" and gave his bank account information to the collector and scheduled several payments. When the first cleared his account, Abascal noticed a company named C.R.G Inc., out of New York showed up on his bank statement as having took the initial $200 payment.
Abascal started to have doubts that he had ever taken out the loan.
“I would have remembered,” said Abascal. “I would have had some kind of documentation laying around that I did take something out.
He alerted his bank to prevent any more payments and tried to find information for the three companies involved.
“I looked all over the internet couldn't find anything,” said Abascal. “Nothing to do with a Payday Loan.”
Abascal said he tried to call back Clyde to discuss the loan in more detail. The number was no longer in service.
NBC Connecticut Troubleshooters could not find business licenses for ADR Associates, CP Investors, or CRG Inc. in the states they’re connected to.
NBC Connecticut Troubleshooters did find hundreds of complaints against the company, with other people saying that “they never took out a loan” and shouldn’t be getting contacted.
An official from the Texas State’s Attorney General office said they had gotten several phone calls about ADR Associates. She also said if the company is based in Texas as they claim to be, they should be registered and bonded with the Secretary of State. ADR Associates is not.
We reached out to ADR Associates on the number that had been left on Abascal’s voicemail. A man said he worked for the company, but would not provide any information regarding their business license. Although, he said he would email information that would prove the company is legitimate but never did.
We also tried Contacting CRG Inc., although there we listings for that company name in several states, none of them were Payday Loan Companies, and none were based out of New York, which is where Abascal’s bank statement listed CRG as being.
Matthew Smith from the Connecticut Department of Banking said you don’t have to pay collectors without first finding out if the debt is legitimate.
“There will be a paper trail so to speak,” said Smith. “You have to be able to verify the debt, and what I mean by verify the debt is they will give you copies of any promissory notes, any contracts that you have signed.”
Smith also said Payday Loans, or any short term loans charging more than 12 percent interest are illegal in the state of Connecticut and you won’t have to pay the money back.
That’s why it is important to get copies of any paper work associated with a loan you supposedly owe, so you can check the numbers. However, Abascal never could verify the interest rate of the loan he supposedly had, because the companies never sent any paperwork.
To help protect yourself from paying a debt you really don’t owe, here are a few tips:
1. You should check to see if a debt is actually on your credit report.
2. Ask the collector to provide details such as the name of the original company and loan, by law they have to.
4. Even if a debt shows up on your credit report, you can dispute it.
3. If a company refuses to give you any paperwork you should contact the Connecticut Department of Banking at 1-800-831-7225.
You can also report any questionable debt collections to Federal Consumer Finance Protection Bureau, Better Business Bureau, or Federal Trade Commission. Filing complaints help spread the word.