debt collectorFollowing a series of debt-collection violations that victimized consumers, New York's attorney general has issued a stern warning to debt collectors.

In the wake of a debt collection scam that targeted military personnel, one of a rash of recent violations, state officials have issued a warning to collectors: they must play by the rules, or pay a steep price of their own.New York Attorney General Eric Schneiderman issued the warning to debt collectors as he announced stiff penalties for a trio of in-state operators who crossed legal lines.

The violations ranged from fraud to threats, intimidation, and misrepresentation.

"These individuals preyed on vulnerable consumers and military personnel who were already struggling financially," said Schneiderman.

The offenders include Stephanie Lowinger, who pleaded guilty to charges that her Buffalo-area collectors sought to defraud members of the military.

According to investigators, Lowinger's company -- known as Neiman, Rona & Associates, among other names -- created "special accounts" around the alleged debt of targeted active-duty personnel. Lowinger's company threatened these alleged debtors with arrest by military police and dishonorable discharge from the armed service.

Additionally, Schneiderman's office said, debt amounts were often inflated, harassing phone calls went unchecked and the company additionally saddled some debtors' credit card accounts with unauthorized charges.

Lowinger has been permanently banned from debt-collection activities in New York State.

The state has levied a $60,000 fine against Frank Santiago -- owner of Eastern Asset Management and Northern Asset Management -- after investigators learned that his collectors sought to trick debtors into thinking an attorney was going to sue them, and threatened consumers with police action and seizure of their homes. Santiago has been ordered to reform his business practices.

Schneiderman's investigation also determined that attorney John Nicolia -- who was paid a retainer and whose name was used by Santiago's companies in the threats -- was aware of his role in the scheme. Nicolia has been banned from debt collection and fined $20,000.

Richard Cerrone, owner of the Southern Tier Agency, Check and Credit Reporting, Inc., Credit and Check Filing, Inc., and Peggy Cerrone - who owns the Cornerstone Resolution Group -- must pay $85,000 in fines to the state for debt-collection violations.

The companies have accrued more than 30 consumer-filed lawsuits and more than 200 complaints filed with the Federal Trade Commission, the Better Business Bureau and Schneiderman's office.

"Today's settlements send a strong message that this office will not tolerate collectors intimidating consumers, or attorneys improperly lending their names to debt collectors," Schneiderman said.

While debt collection laws can vary from state to state, the Fair Debt Collection Practices Act ensures some rights, nationwide.

Collectors cannot contact debtors at work (if they have been told not to by the debtor), nor can they place calls at especially early or late hours (unless debtors agree to take them).

While collectors can contact people other than the debtor to obtain your contact information, they are not allowed to call them more than once, and they cannot discuss your debt with people other than you, your spouse and your attorney.

Unless a collector can provide written verification of the debt, they must stop contacting you once you tell them in writing that you don't owe any or all of the money in question.

In no cases is a collector allowed to threaten violence, harm, public exposure or to falsely claim that they are attorneys or government agents. They cannot threaten to arrest debtors, or garnish wages or seize homes. They cannot charge interest on top of the owed amount.

If you think a collector is violating the Fair Debt Collection Practices Act, or any law, contact your state attorney general, and use the information and complaint resources at the Federal Trade Commission's website: ftc.gov.

Become a fan of Consumer Ally on Facebook.

Increase your money and finance knowledge from home

How much house can I afford

Home buying 101, evaluating one of your most important financial decisions.

View Course »

Intro to Retirement

Get started early planning for your long term future.

View Course »