A federal judge in Illinois has frozen the assets of American Credit Crunchers and an affiliated company named Ebeeze, said the Federal Trade Commission, which also is suing the companies' owner.
The companies used a combination of personal information and threats to extort money from consumers, the Los Angeles Times reported Tuesday.
"This is a brazen operation based on pure fraud. Consumers should not be pressured into paying debt they don't remember owing," said David Vladeck, director of the FTC's Bureau of Consumer Protection.
Authorities said the phony firms were operated by Varang Thaker of Villa Park, Calif. The companies allegedly took in $5 million in the past two years in part by playing the odds, having made 8 million phone calls from phones in India in one eight-month period.
The companies frequently knew enough about a consumer's personal finances to sound vaguely legitimate, the FTC said. A typical target would be someone who had just paid off a loan or had just applied for one, the newspaper said.
The callers often posed as federal agents, occasionally claiming they were from the Department of Crime and Prevention.
"It was intimidating enough that I didn't want to go through that. I said I'll pay you whatever it takes," said JanLaree DeJulius of Las Vegas, who said two collection charges were made against her credit card before she heard a news report about fraudulent debt collectors and put a stop to the charges.
Her credit card company reimbursed her for $163 of the $283 she paid to the fraudulent companies, the newspaper said.