NEW YORK (CNN) -- Michelle Minton was crying as she listened to a man tell her she'd be arrested within the hour if she didn't pay a $4,400 debt.
Michelle Minton says she was bullied into revealing her bank account number, though she didn't owe.
The man on the phone said he was a lawyer. Minton was at her Springville, New York, home with her children, ages 2 and 3, and her husband was away.
"[The caller] started talking about, 'Your kids will see you arrested. If ... your husband can't make it home, child protective services will have to take your kids,' " she said, recalling the 2006 conversation.
Minton didn't owe anything, she says now. But feeling under pressure during that call, she gave the man her bank account number and she lost $900. Watch Minton describe the phone call »
The caller, Minton alleges, wasn't a lawyer, but an employee of a debt-collection operation that New York Attorney General Andrew Cuomo is trying to shut down.
In a lawsuit filed this month in state supreme court in Erie County, Cuomo's office alleges employees of 13 debt collection companies run by Buffalo-based Benning-Smith Group illegally posed as law enforcement officials or lawyers and threatened to arrest and harm people unless they made arrangements to pay.
In one case, a Benning-Smith collector threatened to sexually assault a person's daughter if the person didn't pay the debt, Cuomo's office said. In another, a collector told a woman that he would pay the debt for her if she and her husband engaged in sex acts with him, according to Cuomo's office.
The companies sometimes targeted people who owed nothing, Cuomo said.
"Some companies, for example, they have a debt from a John Brown, let's say. They go to the telephone directory and they call all the John Browns with the same tactics, hoping that one of the John Browns will actually pay the bill," Cuomo said at a news conference Wednesday in Mineola, New York.
"Many of these ... collection agencies, they buy the debt from an existing corporation and they use it as the basis to try to make collections. We have cases where people didn't owe any money, but the tactics were so offensive yet so effective, they actually paid what the [collection agency] was asking just because they didn't want to deal with the phone call," Cuomo said.
More than 850 consumer complaints against the group have been filed with Cuomo's office, the Federal Trade Commission and the Better Business Bureau, Cuomo's office said. Cuomo said he would try to recover money for people who paid what they didn't owe.
CNN's attempts to contact several of the companies for comment were unsuccessful. A lawyer for one of three men named in the lawsuit said he will fight the allegations.
At another news conference this week, Cuomo introduced Rochester resident Dorothy Gilbert to reporters, saying a collector affiliated with a Benning-Smith Group company left her a harassing voice mail message in December 2006.
"You are totally ghetto," the collector said in the message, which was played at the news conference. "Second of all, ma'am, learn English. Get an education, since you're sitting on your fat derriere all day long, making money off the rest of the free working population in this country.
"You might want to try to get educated enough to at least be able to say 'payment plan' instead of 'payment pan,' you uneducated reject."
Gilbert, who wiped away tears as she listened to the recording, told reporters the collector had called her before he left that message, but she hung up because she thought it was a prank call.
The collector demanded she pay a $187 debt. She did owe a bank $187 because she had withdrawn too much money from her account, but she had paid by the time the collector called, she said.
"I feel a sense of relief that something is going to be done about these bill collectors," she said at the news conference, videotaped by CNN affiliate WHEC-TV.
It is against federal and New York debt collection law to pose as an attorney, threaten arrest or to deceive and harass, Cuomo's office said.
New York attorney Joseph Mauro, who represents people alleging debt-collection abuse, said there has been an "increase in ... abusive tactics" by some collectors, in part because of the country's economic downturn. "There is no money to be pulled out of consumers these days, and as that happens, debt collectors become more desperate," Mauro said.
But most debt collectors play by the rules, said Rozanne Andersen, executive vice president and general counsel for ACA International, a debt collectors' trade group. About 10 percent of debt collectors are rogue and "can do tremendous harm," she said.
"The harassing phone calls and the aggressive behavior [are] absolutely unacceptable," Andersen said.
Minton said the pressure put on her during the phone call three years ago is what led her to pay, even though the debt wasn't hers.
"It was so embarrassing," she said. "I was convinced that ... someone was going to be at my house that afternoon [to arrest me] if I hung up the phone with him."
CNN's Mary Snow and Shirley Zilberstein from ""The Situation Room with Wolf Blitzer" and Jason Hanna contributed to this report.
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