How To Spot Debt Collector Scams

Struggling with debt is fairly common, and unfortunately, there are people and companies with less than desirable intentions who take advantage of people in debt. More specifically, there are debt collector scams which could cost you thousands of dollars or more. While you can report fake debt collectors or scams to the Federal Trade Commission (FTC), it’s also a smart idea to know what to look out for before there’s trouble. Below, you’ll find eight telltale signs, how these scams work, and what you can do if you’ve been a victim of a collection agency scam.

At A Glance:8 Warning Signs Of Debt Collector Scams

1. Attempting to collect on a debt you don’t recognize
2. Asking for sensitive information a legit collector would already have
3. Refusing to discuss key information
4. Remaining vague about the debt
5. Demanding immediate payment
6. Insisting you use untraceable payments
7. Making threats
8. Calling at odd times

How Do Debt Collector Scams Work?

Your original lender may try to collect a past due bill themselves, end up hiring a legitimate debt collector, or sell your debt to another entity that may try to collect what you owe. While these are legitimate methods, there are scammers who will try to contact you (and at times intimidate you) into paying them what you owe. It could even be that your debt is forgiven, discharged, or even fake and scammers attempt to convince you otherwise.

Scam debt collectors may try to steal your personal details like your Social Security number, bank account details, or other types of financial information in order to appear more legitimate.

As soon as you pay these scammers, they’ll end up disappearing and you won’t be able to contact them. They’ll also ask you to pay using hard to trace methods such as through gift cards, wire transfers or even cash.

The Fair Debt Collection Practices Act And Your Rights

The federal law called the Fair Debt Collection Practices Act (FDCPA) has regulations in place that forbids debt collectors from using any unfair, deceptive, or downright abusive practices to attempt to collect debt from you. The types of entities that fall under this act include debt buyers, collection agencies, and lawyers. Plus, debt collectors are also required to tell you certain information when contacting you about your debt.

How Are Debt Collectors Supposed To Contact You?

Some of the rules that regulate how debt collectors are required to contact debtors include:

• Debt collectors can't contact you at unusual times or places. For example, they can't contact you before 8 a.m. or after 9 p.m. There are also situations when they cannot contact you at work if they know you are not able to receive such calls at work.
• Debt collectors can't post publicly on social media or other online methods about your debt or what you owe.
• Debt collectors will need to talk to your attorney if they know you hired one to represent you about the debt.

How To Tell If A Debt Collector Is Legit

You can verify the legitimacy of people who contact you claiming to be debt collectors.

Some ways you can do that include:

• Seeing whether state laws require that debt collectors be licensed.
• Asking for a debt validation notice and check for the debt amount, the name of the debt collector or creditor, a statement of your rights, and the account number related to the debt.
• Asking for their name and contact information of the collection agency.
• Calling your original creditor and asking them for the name and contact information of the debt collector.

8 Warning Signs Of Fake Debt Collectors

There are many strategies used by debt collector scammers, so it's crucial you understand as many warning signs as you can to protect yourself.

1. Attempting To Collect On A Debt You Don’t Recognize

Scam debt collectors try to sound convincing, so take caution that you don’t pay for a debt that doesn’t exist. It’s crucial to recognize the debt in question before agreeing to pay it, or else you may end up losing money. If the name of the original creditor the debt collector uses is one you don’t know, chances are that the collection agency isn’t legitimate. Same goes for if they’re not able to offer you some sort of verification of the debt, such as a validation letter.

2. Asking For Sensitive Information A Legit Collector Would Already Have

Scammers may use publicly available information about you (such as your name and occupation) to trick you into revealing more sensitive information. Or, they could also have stolen your information (perhaps you don’t know you’ve been a victim of identity theft) and may use sensitive details to get you to reveal even more, such as confirming your Social Security number or the amount of debt you owe.

3. Refusing To Discuss Key Information

Legitimate debt collectors will readily provide their contact information, their name and the original creditor or lender’s name to prove they are who they say they are. Scammers are reluctant to reveal these details in case you look further who they are or try to confirm the details they told you.

4. Remaining Vague About The Debt

Zombie debts are old debts that have already been resolved, whether you paid them off or had them discharged. Scammers try to drum up these old debts in the hopes scam victims may not recall them. Legitimate collectors are required to disclose how much someone owes and who they owe.

5. Demanding Immediate Payment

Scam debt collectors might pressure you into paying debts immediately. This is forbidden by law as it is a type of intimidation tactic to get you to pay before you really find out that they’re scammers. Legitimate debt collectors will give you some sort of validation notice which offers information about the debt, information about the collector and how you can dispute the debt.

6. Insisting You Use Untraceable Payments

If you’re asked to use payment methods that are hard to trace, this is a sign that it’s a debt collection scam. Some of these untraceable payments include gift cards, prepaid cards, and wire transfers.

7. Making Threats

Scammers often make threats against consumers in an attempt to collect money. Some of these threats include ones related to fines, legal actions, and higher payments. Scammers may even go as far as contacting family, friends or employers about your debt. If someone uses profane language or threatens legal action right away, these are immediate red flags.

8. Calling At Odd Times

Legitimate debt collectors are only allowed to contact debtors at reasonable times, usually between 8 a.m. and 9 p.m. They also can’t call you more than seven times within a 7-day period, though exceptions apply to direct messages on your social media accounts and through text messages. All this to say, if they’re calling at unusual times, they’re most likely a scammer.

What To Do If A Debt Collection Scammer Gets Your Money

Here are some steps you can take if you end up being a scam debt collection victim.

1. Document Everything And Cease Contact

Start writing exactly when and where you were contacted, and other details such as the phone number or other contact information the scammer used. You’ll also want to document the payment method, and include receipts or other written documentation if possible. You’ll also want to cease contact with the potential scammer.

2. Check Your Credit Report

Checking your credit report with the major credit bureaus after being the victim of a debt collection scam will help you to see if there is any suspicious activity, such as an account being opened in your name without your knowledge, or the debt that was supposedly legitimate in fact, wasn’t. You can also tell the credit reporting bureaus you’ve been a victim of a scam — they can place a fraud alert on your credit report.

3. Contact Law Enforcement

If you believe that you’re the victim of a scam, first contact your local law enforcement and file a report. You can also contact the FTC by either filing a complaint or reporting a fraud through their online submission system. To take it one step further, you can report the scam to the Consumer Financial Protection Bureau, or CFPB.

4. Connect With Your State Attorney General

Scam victims should contact their state attorney general’s office because they may be able to help. It can help them alert the public of potential scams. You may be able to call or file a complaint through your state attorney general’s office.

5. Alert Your Banks And Credit Card Companies

If you are the victim of a debt collection scam and ended up revealing sensitive information, report the incident to your bank and credit card issuers. That way, you can get a fraud alert placed or a representative can help you with other tasks like setting notifications each time there is an activity on your account for you to monitor.

FAQs: Collection Agency Scams

Here are some frequently asked questions about collection agency scams.

How do I know if a debt collector is legit?

You can tell if a debt collector is legitimate if the representative contacts you at a reasonable time, offers information about your debt and their contact details, and doesn’t resort to intimidation tactics. You can also ask for a verification letter or contact information to verify the collection agency with your original creditor.

Can a debt collector ask for my Social Security number?

No, a debt collector can’t ask for your full Social Security number. They may ask you for the last four digits to verify your identity before talking further about your debt. If you are uncomfortable doing so, you can try and request a different verification method, or contact your original creditor to verify that the collector is legitimate.

The Bottom Line: Beware Of Scams When Debt Collectors Contact You

The truth is that there are a lot of scammers posing as legitimate debt collectors in an attempt to collect money from you. The best action you can take is to be aware of the red flags and verify the debt and debt collector with the original creditor and your own research.

Understanding where your money is coming and going, including keeping tabs on your existing debts, may make it more difficult for scammers to try and trick you. Download the Rocket Money℠ app and enjoy in-depth visibility over your finances.