Debt Collector Scams

What to Watch Out For If You Are In the Red

Debt Collector Scams
February 11, 2016

With the proliferation of information – and misinformation – these days, it is possible that you will be contacted by a debt collection agency for a debt you never incurred. This could be a legitimate misunderstanding caused by third-party purchases of debt, or it could be an unscrupulous scam artist posing as a debt collector, trying to get personal information and/or extort money from you.

You probably have legitimate debts, but swindlers completely unrelated to that debt might try to confuse you or bully you into paying them instead. They probably have your Social Security number and/or other personal information that makes them sound legitimate.

Scam artists may try official-sounding approaches and demand an immediate response, threatening arrest, lawsuits, garnishment of wages, required appearances in some far-away court, or black marks on your credit report. Ignore these tactics. It violates federal law for a debt collector to be abusive, and certainly, nobody is going to come and immediately arrest you for any unpaid debt.

Another dead giveaway is to demand that payment be wired or sent using a service such as Green Dot MoneyPak. Legitimate debt collectors do not use such methods.

If you exercise your rights under the Fair Debt Collection Practices Act (FDCA), you will be able to deal with scam debt collectors with ease. Here is how to do it.

  • Confirm the Debt Collector's Information – Ask the collector for information on his or her company, including a physical street address, confirmation of their telephone number, and licensing.

  • Validation Notice – Any legitimate debt collector must provide you with written notice containing specific information about the debt, in order to validate that the debt is real (whether you legitimately owe it or not). The information must include the name of the creditor and the amount of debt, as well as a statement of rights under the FDCA. Do not accept e-mail confirmation.

    Hang up immediately if the collector refuses any of the above requests, or begins to use abusive language. Do not engage any further. If the collector realizes you have no intent of paying, he (we will assume the scammer is male for the purposes of this article) will eventually move on to more accommodating targets.

  • Turn the Tables – If you do engage a scammer, turn the tables on him. For example, if he says a court action has been filed, ask for the case number and the court in which the action has been filed. If he claims to be with law enforcement, ask for verification of the agency. Make it known that you will follow up immediately after the call, and you will report him to law enforcement if he does not check out.

  • Give No Information – Never give personal information, bank account/Social Security numbers, or anything similar unless the debt has been verified. Be extremely careful not to say anything that gives the collector reason to think you may be responsible for the debt, and certainly never agree to pay a portion of it.

  • Check Credit Report – You can check your credit score and read your credit report for free within minutes using the MoneyTips Credit Manager. A clean credit report does not mean that the debt is not real – it could be a debt of yours that has passed the statute of limitations and has been written off and sold to a third party, or it could be a case of mistaken identity.

Stay calm and follow the above steps and the effect of scammers will be limited to mild annoyance. Don't forget to report scammers to the Federal Trade Commission so that others may be spared this form of annoyance.

If you want to settle outstanding debts for less than what you owe, try our debt settlement tool.

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