8 Ways to Recognize Debt Collector Scams
Watch out for these red flags with fake debt collection agencies
If you've been receiving debt collector phone calls or letters, you need a way to tell real collection agencies from fake ones so you don't get scammed.
Businesses often hire third-party debt collectors to pursue past-due accounts. For example, a credit card issuer might hire a debt collector to go after you for a charged-off account. Those are legitimate attempts to collect on a debt you owe.
However, while some debt collectors contact you to collect on actual debts, there are scammers who pose as collection agents to trick you into paying money for debts that have already been paid or canceled or that don't even exist. Here are eight ways to recognize debt collector scams so you can ensure you aren't duped out of your money.
The Debt Collector Pushes You to Pay Right Away
Most debt collectors will use a certain amount of pressure to convince you to pay the debt. After all, they often don't get paid unless you pay. But be suspicious if a debt collector seems to use an unusual amount of pressure to get you to pay immediately, particularly if they use scare tactics.
Be wary of threats and pressure to act immediately. If a caller threatens to hit you with a lawsuit if you don't make a payment right away, he could be a scammer.
They Ask You to Pay via Wire Transfer
Legitimate debt collectors will accept a variety of payment methods including check, debit card, or credit card. Some may even offer online payments via a portal linked directly from their website.
A sure sign of a collection agency scam is a collector that wants you to pay via wire transfer or another method that can't be traced, such as a prepaid card. If the payment method can't be traced, you'll have a harder time getting help from authorities.
You Don't Recognize the Creditor or the Account
You do business with lots of different companies during your life. It's possible that a collector could contact you about an account that you've long forgotten about.
However, if the creditor sounds completely foreign, or you know you never had an account with that business, there's a chance it's a scam. Never pay a debt you don't recognize. You have the right to request proof of the debt from the debt collector in the form of a validation letter before you send payment.
Remember, you don't have to act right away, even if the debt collector is pressuring you to. You can hang up, collect your thoughts, and find out more information about the debt they're calling you about.
You can also check your credit report for an account from that particular creditor. Note that negative accounts fall off your credit report after seven years, so not finding the creditor on your credit report doesn't necessarily mean the debt collection is a scam.
Even if you recognize the creditor, it doesn't mean you're not being scammed. When you request verification for the debt, the debt collector has to provide you with proof of the debt and proof they're authorized to collect on the debt. Scammers may have accessed information about accounts you've previously held and use this information to trick you into paying.
You Can't Find Anything on the Internet When You Look up the Phone Number
One way to check whether a debt collector is a scam is to search the internet for their phone number. Often, you'll find web pages where other consumers have commented on the debt collector and the business they collect for. If, however, you look up a phone number and receive no results, or if you see others commenting that the company is a scam, then you know to avoid sending any payment to that company.
You're Threatened With Jail Time
It's illegal for a debt collector to lie to you, threaten action they can't take, or to pose as government officials. Legitimate debt collectors aren't as likely to use these illegal tactics because they don't want to put their business at risk by breaking the law.
Scammers, on the other hand, aren't concerned about following debt collection laws.
The Debt Collector Asks You for Information They Should Already Have
Not every debt collection scam aims to trick you into sending payment for a debt. Many are seeking personal information they can use to commit fraud or identity theft—a process known as "phishing."
When creditors hire debt collectors, they give them a certain amount of information about you. That often includes your name, address, date of birth, account number, and some or all of your Social Security number. Be suspicious of a debt collector that calls asking for any of this information.
But just because a caller has a lot of information about you, it doesn't mean they're not scamming you. With so much information about you on the internet and social media, debt collection scammers can gather enough information to make you think they're real.
They Won't Give You Their Company's Contact Information
Debt collectors are required by law to identify themselves when they're on the phone with you. Real debt collectors should be willing to give you the name of their company, their phone number, and their mailing address.
You need the mailing address in particular so you can send a letter requesting proof of the debt before sending payment.
It's a sign of a debt collection scam if a company isn't willing to give up their contact information.
The Collection Isn't on Your Credit Report
There are some legitimate situations where a real collection may not be on your credit report. If the account is past the credit reporting time limit (usually seven years), the debt collector can't legally add the account to your credit report. Sometimes there's a delay between the time a collector receives the debt and when it reports it to the credit bureau.
Even knowing that there are some exceptions, not seeing a collection on your credit report can sometimes be a sign that the collection is a scam. Use other methods to verify the debt collector before you consider making payment.
If You Think You're Being Scammed
If you suspect you're being scammed, you can hang up immediately. Next, you must carefully vet any debt collector before sending payment. There's a chance the company is pursuing a real debt, but if they're not, you don't want to give them your money or your information.
If you think your caller is a scammer, you can take the following steps to protect yourself:
- Ask the caller for his name, company, mailing address, and phone number.
- Refuse to give him your personal or financial information.
- Hang up and write a letter requesting them to stop calling you.
- Send a letter requesting proof of your debt. If a collection agency doesn't return proof or the proof isn't enough to show that it's a real debt, the agency isn't allowed to continue to contact you.
- Contact your creditor to check whether they've hired this collection agency.
- Report the call to authorities.
Unfortunately, if you fall for a scam and send payment, you may not be able to get your money back, especially if you wired payment or used a prepaid card.
Federal Trade Commission Consumer Information. "Fake Debt Collectors." Accessed May 5, 2020.
Federal Trade Commission Consumer Information. “How Scammers Make You Pay.” Accessed May 5, 2020.
Federal Trade Commission Consumer Information. "Fake Debt Collectors Impersonate Real Businesses." Accessed May 5, 2020.
Consumer Financial Protection Bureau. “Are There Laws That Limit What Debt Collectors Can Say or Do?” Accessed May 5, 2020.
Consumer Finance Protection Bureau. "How Can I Verify Whether or Not a Debt Collector Is Legitimate?" Accessed May 5, 2020.
Consumer Finance Protection Bureau. "My Debt Is Several Years Old. Can Debt Collectors Still Collect?" Accessed May 5, 2020.
Consumer Finance Protection Bureau. "What Information Does a Debt Collector Have to Give Me About the Debt?" Accessed May 5, 2020.
Consumer Financial Protection Bureau. “When Is Debt Collection Illegal?” Accessed May 5, 2020.
Federal Trade Commission Consumer Information. “How to Recognize and Avoid Phishing Scams.” Accessed May 5, 2020.
Federal Trade Commission. "Fair Debt Collection Practices Act." Accessed May 5, 2020.
Federal Trade Commission Consumer Information. “Debt Collection FAQs.” Accessed May 5, 2020.
Consumer Finance Protection Bureau. "How to Tell the Difference Between a Legitimate Debt Collector and Scammers." Accessed May 5, 2020.