A large, nationwide debt-collection operation that allegedly brought in tens of millions of dollars through illegal means — like impersonating law-enforcement officers, or threatening arrest for non-payment — is the target of a joint legal action by the Consumer Financial Protection Bureau and the New York state attorney general.

According to the complaint [PDF] filed this morning in federal court by the CFPB and NY AG Eric Schneiderman, they ran a trio of debt-buying and debt-collection companies — Delray Capital, Enhanced Acquisitions, and Northern Resolution Group — and also oversaw a network of at least 60 collection “shops” to collect on behalf of these companies.

The three main companies involved in the scheme acquired tens of millions of dollars in outstanding consumer debt, some of it from payday lenders. But according to the complaint, the companies had a policy of tacking on $200 to each individual debt they purchased, regardless of whether this additional money was allowed by applicable state laws. As a result, some debts were inflated by as much as 600%.

In fact, the government says that some of the firms that sold debt to the defendants actually had terms in their agreement that explicitly prohibited the debt-buyers from adding these charges — but the defendants added them anyway.

Yet the scheme went well beyond simply adding potentially illegal fees to these debts, according to the complaint. The defendants and their collections agents allegedly engaged in a number of practices that, if true, clearly run afoul of the Fair Debt Collection Practices Act, which includes a long list of things that collectors can not do to convince people to pay up.

Like impersonating a government official or threatening arrest. The complaint gives the example of an agent for Enhanced Acquisitions allegedly posing as an officer from the “Los Angeles County Courts” in 2013. The government says this agent told the consumer she would be “arrested” for “check fraud” if she didn’t pay up right away, and that she “did not have the time to get a lawyer” because she would be arrested at her home or work the next day. This same agent allegedly told the same story of possible arrest for non-payment to the consumer’s relatives.

Another no-no under the FDCPA is falsely claiming that documents presented to a consumer are legal documents, but the government says that the defendants repeatedly told debtors that they had been sued when no lawsuit had actually been filed.

“Living with debt is difficult enough, without the added stress of being harassed and threatened by debt collectors,” NY Attorney General Schneiderman said in a statement. “These collection shops inflated debts, threatened victims, and deceived them out of millions. This suit sends the message that debt collectors that employ abusive tactics will be held accountable.”

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