How to Recognize Debt Collection Scams
Businesses often hire third-party debt collectors to pursue past due accounts. For example, a credit card issuer might hire a debt collector to get you to pay a charged-off account. While some debt collectors contact you to collect on legitimate debts, there are scammers who pose as collection agents to trick you into paying money for debts that have been paid or canceled or that don't even exist. Here are eight ways to recognize debt collection scams so you can ensure you aren't duped out of your money.
The Debt Collector Pushes 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. Be suspicious of a debt collector seems to use an unusual amount of pressure to get you to pay immediately, particularly if they also use scare tactics to get you to pay right away. For example, a debt collector could be scamming you if it threatens you with a lawsuit and tells that you can avoid the lawsuit by paying right away.
The Debt Collector Asks You to Pay via Wire Transfer or Another Untraceable Method.
Legitimate debt collectors will accept a variety of payment methods including check, debit card, or credit card. A sure sign of a debt collection scam is a collector that wants to you to pay via wire transfer or another method that can't be traced. If the payment method can't be traced, you'll have a harder time getting the authorities involved.
You Don't Recognize the Creditor or the Account
We'll have accounts with lots of businesses over our lives. It's possible that a collector could contact you about an account that you've long forgotten about. 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 collection you don't recognize. You have the right to request proof of the debt from the debt collector before you send payment.
You can also check to see if your credit report includes an account for that 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 make a debt validation request, 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 or a company that is known for scamming is to search the internet for the 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 you see others commenting that the company is a scammer, then you know to avoid sending any payment to that company.
The Debt Collector Threatens You With Jail Time or Poses as Government Official
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 at the very least 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 Ask You for Information They Should 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. When creditors hire debt collectors, they send over 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 you 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. A real debt collector 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 the debt before sending payment. It's a sign of a debt collection scam if a company isn't willing to give up their 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.
To protect your rights and ensure you're not being scammed, it's best to vet any debt collector before sending payment. There's a chance the company is pursuing a real debt. Ask the collection agency for its name and mailing address and send a letter requesting proof of the debt. If a collection agency doesn't send 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.
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. Report debt collection scams to the Federal Trade Commission, the Consumer Financial Protection Bureau, and your state Attorney General.