New Check Fraud From Cash Advance Scam
There is a new check fraud scam in Southwest Florida. In the past few weeks, I have received numerous emails and phone calls from clients and potential clients regarding phone calls and messages they and members of their families have received on a check fraud investigation resulting from a payday advance. The callers allege that they are “investigators” and are investigating the debtors for check fraud for a loan from a payday advance that was not paid. The callers state the debtors need to return the call to prevent criminal charges. Some callers even go as far to say that a warrant has been issued and give fake case numbers for the court where the debtors live. As you can imagine, many people become extremely frightened and upset when they hear this.
The first thing you need to know is the allegations made are completely FALSE! There are no criminal charges for the inability to pay a debt. Not paying a payday advance is not check fraud. A fraudulent check can occur in situations where you issue a check on an account knowing it has insufficient funds to cover the check or forging a signature on another person’s account. When a payday advance is taken, the advancing company is loaning you money until your next payday and is getting interest (usually very high) back on the return. It is a loan, plain and simple, not a fraudulent check.
The phone calls are coming from collection agents attempting to scare people in paying back the debt. How can this misrepresentation be legal you ask – the answer is, it is NOT! Consumers have numerous protections under the law against this type of abusive and misleading debt collection. The protections arise under both federal and most state laws.
The conduct described can subject the collectors to liability for any actual damages sustained such as emotional distress, statutory damages, and punitive damages. Under the federal Fair Debt Collection Practices Act, statutory damages can reach $1,000 in addition to any actual and punitive damages. Florida law also allows for $1,000 in statutory damages and recovery of actual and punitive damages for violations of the Florida Consumer Collection Practices Act. Both of these Acts allow a debtor successful in litigation to recover attorney’s fees and costs from the abusive debt collectors. The abusive collections can also subject them to civil penalties through actions brought by state attorney generals and the Federal Trade Commission.
So if the conduct is illegal and subjects the collectors to liability, why do they do it? Because it works. Under a cost-benefit analysis, these abusive debt collection companies make a lot of money by using illegal scare tactics. If it leads to a few lawsuits, their profits make the potential liability worth it. Or, the company is so small that once it is served with a lawsuit it can quickly close shop and disappear. Therefore, the best defense against these companies and their illegal ways is the knowledge that their representations of pending criminal charges are flat out lies.
This post was submitted by Attorney David Fineman of The Dellutri Law Group, P.A.
