Home > Managing Debt > The One Way You Should Never Pay a Debt Collector

Comments 0 Comments
Advertiser Disclosure


As the mother of five children and the wife of a disabled husband, Ashley was scared when she received a call telling her that one of her loans had gone into default and that if she couldn’t cough up the $398 she owed right away “they would send a sheriff to my job or home to serve me with court papers and I would be ‘behind bars’ for six months.”

She shared her story on the Credit.com blog, where she explained that the collector talked her into getting a “Vanilla reload network card” which she purchased at Walgreens in the amount of $300. Over the phone, she gave them the 10-digit number on the back of the card.

Fifteen minutes later she received another call demanding she do the same thing – for another loan. She realized she had been scammed.

“I have anxiety issues (and) got so scared I threw up,” she wrote.

The National Consumer’s League, which runs the Fraud.org hotline, is warning consumers about this scam, and notes that “while the misuse of (Green Dot) MoneyPaks, Vanilla Reloads, or similar payment mechanisms isn’t new, NCL has received a significant number of complaints so far this year.”

Reloadable prepaid cards have become the preferred payment method of scammers for a few reasons:

  1. They are fast.
  2. They are untraceable.

The National Consumer’s League (NCL) explains:

“Fraudsters trick consumers into giving them the control number or PIN (off the card), which the scammer then uses to load the funds onto their own prepaid debit card. Since the funds are available instantly, the thief can use their debit card to take cash out of ATMs. These services aren’t protected from fraud the way that credit or debit cards are, the victim is typically left with nothing.”

John Breyault, vice president of public policy, telecommunications and fraud for the NCL warns: “It’s essentially the same as having cash in your hands. The fraudster can immediately access those funds which they can put onto a prepaid card they can turn into cash.”

Don’t Fall For This

How can you protect yourself from this scam? Here are several steps to take:

1. If you get a debt collection call out of the blue, insist the collection agency send you written notification of the debt (by mail, not email), which they are required to do under federal law.

2. Check your credit reports immediately. Legitimate bill collectors typically report these accounts to credit reporting agencies, but scammers don’t. Here’s how to check your free annual credit reports. You will also want to monitor your credit scores throughout this process. You can get your free credit scores at Credit.com.

3. Don’t fall for high-pressure tactics. Scammers will threaten to send you to jail, prosecute you for fraud or “theft by deception” or take legal action if you don’t pay immediately. It is illegal for collectors to threaten to take action they don’t intend to take – but scammers don’t care if they break the law. They just want your money, and they want it fast.

4. If you do determine that you owe the debt and that you are dealing with a legitimate collection agency, consider paying by a method that allows you to keep track of your payments. Here’s a guide to options for paying a debt collector. If you decide to pay a debt you owe with a prepaid card, be sure to read these fraud prevention tips from Vanilla Reload first.

5. If you have lost money in one of these scams be sure to report it at Fraud.org. Your complaint will be shared with more than 90 law enforcement agencies in the U.S. and abroad.

More on Managing Debt:

Image: Zoran Zeremski

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team