The One Way You Should Never Pay a Debt Collector

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 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 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

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 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

You Might Also Like

A man sits on a couch with his laptop in his lap, looking at the phone in his hand.
Learn more about what a judgment is, how it works, and what the d... Read More

May 30, 2023

Managing Debt

A woman calculates her medical bills at his desk and ponders medical bill myths.
Medical bills can be daunting. Around 67% of bankruptcies in the ... Read More

September 7, 2021

Managing Debt

A hand holds an iphone, open to the home screen with debt management app icons.
Debt can feel like a terrible thing, but paying off your debts is... Read More

December 23, 2020

Managing Debt