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3 Strategies for Dealing with Debt Collection Scammers

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If you’ve received a call from a debt collection agency telling you that you’ll be arrested, served with a lawsuit or subject to criminal charges if you don’t pay them right away, there’s a good chance it’s a debt collection scam.

As a general rule, anytime a debt collector calls you out of the blue, proceed with caution. That’s especially true if:

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    • The collector is threatening you with dire consequences if you don’t pay immediately, or
    • You owe or applied for a payday loan – especially an online payday loan.

    Both of these scenarios are associated with scammers who are often (though not always) based overseas.

    To protect yourself against debt collection scammers, there are three steps you should take:

    1. Verify the Debt is Legitimate

    It is very risky to pay a debt collection agency the first time it contacts you by phone. If it turns out to be a scam, your money will be gone with no hope of getting it back. So take time to investigate and you could save yourself some serious money.

    The fact that the debt collector has your personal information, such as your Social Security number, employment information, or names and telephone numbers of friends or relatives does not mean the debt is legitimate. Fraudsters can easily buy information about people who have defaulted on debts or who applied for loans online through sketchy websites. Anything you’ve put in a credit application could wind up in the hands of these crooks.

    Under a federal law, the Fair Debt Collection Practices Act, a debt collector must provide you with a written “validation notice” within five days after they first contact you. This notice also must include the name of the creditor to whom you owe the money, how much you owe, and how to dispute the debt if you don’t believe it is correct. Insist this notice be mailed – not emailed – to you.

    Another tip: Get your  free annual credit report from all three credit bureaus to see if the collection account is listed on your credit reports. If it is, and the information is not accurate, you can dispute it. Conversely, if it is not on your reports, it could be a further indication that you are not dealing with a legitimate collection agency, as the scammers can’t and won’t report to credit bureaus. (While you’re at it,  monitor your credit scores for free. A sudden drop in your scores could indicate a collection account has been added.)

    2. Verify the Collector is Legitimate

    “Spoofing” technology makes it easy for a collector to pretend they are calling you from a phone number that is not theirs. Scammers have impersonated law firms and even law enforcement agencies in an effort to get you to pick up the phone and make a payment.

    Ask the caller for the name and address of the collection agency they work for. Again, you are entitled to this information. Then go online to see what you can find out. Does this firm exist? Are they listed with the Better Business Bureau? If so, are there complaints about them? You can also try searching for the phone number listed on your caller ID, but please remember these numbers can be faked. So don’t rely on that information alone.

    If the name of the collection agency or law firm is legitimate, it does not hurt to call them directly if the call you received seemed suspicious. If the agency is legitimate they will have no problem confirming your debt. But if it turns out someone else is using their name to try to rip people off, they will want to know about that as well. Same thing goes with callers who claim to represent the FBI, sheriff’s department, courts or other government agencies. These agencies will be able to confirm you are talking with scammers. (Courts don’t call consumers to collect debts, by the way, and neither does the FBI!)

    3. Fight Back

    Any of the following are red flags when a debt collector calls you demanding payment:

    • Discussing your debt with relatives, coworkers or friends (that’s illegal);
    • Threatening to “serve you” with a lawsuit if you don’t pay first (process servers who deliver these notices rarely, if ever, call consumers first, and they don’t try to collect payment);
    • Warning you that criminal charges will be filed, including “theft by deception.” It’s not a crime to be unable to pay your bills, and consumer debts are typically civil matters, not criminal.
    • Insisting you send them a prepaid card or wire payment. These funds are untraceable, which is why crooks like them.

    You can tell a collector who is crossing the line that you are going to report them to law enforcement. You can also file a complaint with or the Consumer Financial Protection Bureau to file a complaint.

    If they continue to call, you may need to screen your calls with a service like, Google voice, or with an answering machine. Eventually they will (hopefully) stop calling.

    This article has been updated. It was originally published Feb. 3, 2015.

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