How to Spot Fake and Abusive Debt Collectors
The Shady World of Debt Collection Scams
You get a call; someone‘s saying you owe money – maybe it’s an old debt you legitimately forgot about, or maybe it’s complete nonsense. How can you tell if it’s a real debt collector or just a scammer trying to trick you? Debt collection is a murky world, full of shady practices and outright fraud.Scammers know people are afraid of debt and the consequences of not paying. They’ll try to use intimidation tactics, like threatening you with bogus legal action or even arrest. Other times, they’re just trying to get you to “verify” personal info so they can steal your identity.But there are also plenty of legitimate debt collectors out there, doing their job within the bounds of the law. The hard part is telling them apart from the con artists. That‘s what this guide is all about – giving you the tools to sniff out debt collection scams and deal with real ones properly.
Why You Need to Be Careful
Debt is nothing to mess around with. Unpaid debts can do serious damage to your credit score and financial life. You could get taken to court and have your wages garnished. In some cases (like with unpaid taxes or criminal fines), there’s even a slim chance of arrest if you totally blow it off.So when a debt collector calls, it’s understandable to feel anxious and want to take care of it ASAP. Scammers exploit that fear to get you to pay up before you‘ve verified anything. Once the money‘s gone, it’s extremely difficult to get it back.On the other hand, just ignoring real debt collectors is also a bad idea that’ll make the situation worse. You need to be able to distinguish the legitimate ones from the fakes so you can respond appropriately.
-How to Tell If a Debt Collector Is Fake
There are some major red flags that separate scammy debt collectors from the real deal. If you encounter any of these tactics, it’s a good sign you’re being conned:
They Violate Debt Collection Laws
The Fair Debt Collection Practices Act (FDCPA) lays out a bunch of rules that legitimate debt collectors have to follow. If they’re breaking any of these, they’re probably not on the up-and-up:
- Failing to validate the debt: They have to provide details like the creditor’s name, how much you owe, and your rights to dispute the debt. If they can’t or won’t do this, it could be a scam.
- Harassment and abuse: No calling before 8am or after 9pm, no profanity or threats of violence, no endless calls meant to harass you. That’s all illegal.
- Lying about the situation: They can’t falsely claim to be attorneys, court officials, or law enforcement. Or say you’ll be arrested or have your wages garnished if it’s not true.
- Revealing your debt to others: Legit collectors can’t blab about your debt situation to friends, family, neighbors or coworkers.
The FDCPA has a bunch of other provisions too. If a collector seems to be violating the spirit of the law in any way, that‘s a big warning sign.
They Demand Weird Payment Methods
Pushing you to pay by gift cards, prepaid debit cards, wire transfers, or crypto is a classic debt collection scam. These payment methods are largely untraceable, so once the money’s gone, you’ll never get it back.Legitimate debt collectors only want payment through secure, traceable methods like checks, money orders or straight from your bank account. If they‘re insisting on those shady payment apps and gift cards, it’s a huge red flag.
-They Get Aggressive Fast
Legit debt collectors have to follow a process. They‘ll start out by sending letters and making polite phone calls. It’s only after multiple attempts that they may start getting a little firmer.Scammers, on the other hand, tend to get aggressive and threatening right away. They might yell and curse at you, claim you’ll be arrested or sued, or brag about ruining your credit if you don’t pay up now.While real collectors certainly don’t have to be nice, an instant “thug life” attitude is a telltale sign of a fraudster.
They Can’t Answer Basic Questions
A legitimate debt collector should be able to provide detailed information about your debt without any issues. The creditor’s name, when and how the debt originated, the current balance with a breakdown of fees and interest, and your account numbers.If the person calling you seems fuzzy on these basic details or just flat-out refuses to answer questions, they’re probably not a real collector. It could be a scammer who bought some of your personal info on the dark web and is trying to bluff their way through.
They Ask for Private Info
Real debt collectors already have access to your personal and financial information. They don’t need to ask you for stuff like your Social Security number, birth date, credit card numbers, or bank account details.If the caller is demanding you “verify” this kind of sensitive data, it’s a huge red flag. They’re probably just trying to steal your identity or drain your accounts. Hang up and don’t give them anything!
You Can’t Verify Their Identity
When a legitimate debt collector calls, they should have no problem providing details to verify their identity and company. A real name, a callback number, a physical business address, professional license numbers if required in your state, stuff like that.If the caller refuses to give any of those details or the info they provide doesn‘t check out, you‘re likely dealing with scammers. Don‘t engage any further.
How to Handle Legitimate Debt Collectors
So let‘s say you’ve looked into it and this does seem to be a real debt collector. You still need to be careful about how you deal with them. Here are some tips:
-Get it in Writing First
Under the FDCPA, debt collectors have to provide written validation of the debt they‘re trying to collect. This should include details like:
- The name of the creditor
- How much you owe
- Your rights to dispute the debt
Don’t pay or even discuss the debt until you receive this written notice. If it never comes or has errors, you may want to dispute it.
Don’t Give Them Any New Info
The debt collector should already have all your relevant personal and financial details from the original creditor. You don’t need to “confirm” or provide any new info.In fact, it’s better if you don’t. Anything you tell them could potentially be used against you later, or give scammers new info to commit identity theft.
-Know Your Rights
Thanks to laws like the FDCPA, you have rights when dealing with debt collectors. Like the right to tell them to stop contacting you, or setting limits on what times and methods they can use.Learn your rights and don‘t let collectors violate them. If they do, you may be able to sue them.
Don’t Let Them Rattle You
Debt collectors are allowed to be a little firmer than customer service reps. But they’re not allowed to threaten, harass or abuse you in any way. Don‘t let them scare you into paying debts you‘re not sure about.If they get abusive, hang up and file complaints with the FTC, CFPB and your state attorney general. You can also look into suing them for violations.
Negotiate if Needed
If the debt is legit, you may be able to negotiate a payment plan or settlement for less than the full amount. Especially if the debt is older and has already been sold from the original creditor to a third-party collector.Just be careful about resetting the statute of limitations. Certain actions like making a payment or acknowledging you owe the debt can restart the clock in some states.
Keep Excellent Records
Make sure to get everything in writing and keep meticulous records of all your interactions with debt collectors. Save letters, take notes on phone calls, record them if legal in your state.Good records are your best defense if a debt collector ever violates your rights or tries any shady business. They’re also essential if you have to go to court over the debt.
What If You’re Being Scammed?
So what if you’re pretty sure this debt collector is a scammer? Don‘t just ignore them – that can make things worse and they may keep escalating their harassment.Here are some better ways to handle debt collection scams:
Demand Debt Validation: By law, they have to provide written proof that you actually owe this debt. If they can’t or won‘t, you know it‘s a scam.
Tell Them to Stop Contacting You: You have the right to formally demand they stop contacting you, and they’re legally obligated to comply after that.
Report Them to Authorities: File complaints about the scam with the FTC, CFPB, your state attorney general’s office, and even the police if they‘re making threats.
Check Your Credit Reports: Scammers may try reporting fake debts to hurt your credit. Check your reports and dispute any errors you find.
Consider a Credit Freeze: If you’ve given the scammers any personal info, a credit freeze can prevent them from opening new accounts in your name.The key things are to avoid paying them anything, protect your personal info, and report their abusive behavior. With some diligence, you can shut down debt collection scams.