CHICAGO (CBS) — It’s a scam so big thousands of people here in Chicago and around the country lost $5,000,000; and the Federal Trade Commission is still adding it up.

The scam was first exposed by the CBS 2 Investigators. People were told to pay up or they or someone they loved would be arrested.

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The FTC says that in this troubled economy, this scam took advantage of people who may have checked out or even take out pay day loans on line.

Their investigation, based in Chicago, began after CBS 2 reported on what happened to Kenneth Dudash.

“They were going to send a sheriff out to my house and arrest my fifteen year old son,” Dudash recalled one of the callers threatening.

The caller claimed his son took out a $483 payday loan online.

“I was just very, very distraught, immediately upset,” Dudash said, and he called CBS 2 Investigator Pam Zekman

We were there when Dudash called them back to ask how his son supposedly got the loan money and was told it was deposited in his son’s checking account.

“I’m sorry to tell you my son does not have a checking account,” Dudash told the caller, refusing to pay the money.

But thousands of people have.

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“Sometimes they know they don’t owe anything, but they pay anyway because they do not want to be arrested,” said Steve Baker of the Federal Trade Commission.

JanLaree DeJulius was one of them after she got a call at work from someone claiming to be a cop who told her,

“They were going to arrest me and they were going to go to human resources and garnish my wages.” DeJulius said. “It was intimidating enough that I did not want to go through that so I just said sure. I’ll pay, whatever it takes.”

It cost her more than $700.

DeJulius said her ex-husband had taken out a pay day loan using her name and personal information.

“When you go on line and apply for a pay day loan you supply a ton of personal information often including checking account and other banking information,” Baker said. “And the application information from those on line pay day loans is somehow finding its way into the hands of some people in India.”

The $5 million dollars they collected, the FTC charges, wound up in accounts belonging to American Credit Crunchers, a debt collection firm, Ebeeze LLC and their owner of record Vrang K. Thaker who were named as defendants in the FTC lawsuit filed in Chicago.

The FTC has obtained a court injunction against them, frozen the assets uncovered so far and hopes to get money back to the scam victims.

“This is the first time that I have seen telemarketers coming out of India and we hope it’s not a growing trend,” Baker said. That’s, in part, because the FTC has been unable to get any cooperation so far from law enforcement agencies in India.

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To protect yourself from a scam like this, you should know that it is illegal for a debt collector to threaten to arrest or sue you. And they must provide you with written proof that you owe them the money. If you don’t get it, don’t pay and you can file a complaint with the FTC.