Little Clues That Show You a Debt Collector is Fake
Scammers trick consumers out of millions each year. Threatening calls and urgent demands for payment are signs that you're dealing with a fake debt collector.
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Having old debts hanging over your head can be scary. Scammers may try to play on that fear by pretending to be a debt collector coming after you for past due bills.
Recognizing a scammer posing as a collection agency may be a little harder now that collection agencies can contact consumers through social media, text, and email. Knowing the signs to look for can help prevent you from becoming a victim.
They won't give you their contact information.
Always ask for details to check the identity of a business who contacts you for money or information. A legitimate collection agency won't have a problem telling you their business name, address, or website. Scammers try to skirt around details and provide you as little information as possible. Be suspicious of a company who won't give you basic information about their business.
The company doesn't come up in an internet search.
It's a major red flag if you can't find any official information about a company online. Most legitimate companies will have a company website and a Better Business Bureau profile, at a minimum. If the company does come up in an internet search, check that the company's name, phone number, address, and website all line up.
Verifying the business information online is a start, but it's not enough. A scammer can fake their caller ID and pose as a real company, so doing a little more due diligence will give you some extra assurance.
Your state regulators can't verify the company.
Most states require collection agencies to be registered and have valid insurance to collect from residents within that state. Check with your state's Secretary of State and Department of Insurance to verify whether a debt collector even meets the requirements for doing business where you live.
They pressure you to make payments that are hard to trace or don't provide consumer protections.
One of the biggest ways to recognize a fake debt collector—or any scammer—is how they want you to pay. Legitimate companies accept standard payment methods: credit cards, debit cards, or check/ACH. Many also offer the option to mail your payment or pay online.
Not wanting to be tracked, scammers commonly demand to be paid immediately via prepaid card, cashier's check, wire transfer, or cryptocurrency. Not only is it impossible to trace the payment back to them, you also lose some of your legal protections, like the ability to dispute a transaction.
Threats to have you arrested, garnish your wages, or take your property if you don't pay immediately are signs that the debt collector is really a scammer.
They pressure you to pay or give up personal or financial information.
Scammers aren't always after money—at least not directly. Sometimes they're looking for information they can use to commit identity theft or fraud. So, they trick or intimidate people into giving up sensitive information like your partial or full Social Security number or the security code on your credit card.
Their reason for asking for information may sound convincing, but remember that you haven't confirmed that they're not scamming you.
The original creditor has a different story.
Once a debt has been sold or assigned to a collection agency, the original creditor or lender often can't give you much information or take payment. However, they may be able to give you the name and phone number of the collection agency who took over the debt—or if the debt was sent to a collection agency at all.
Reporting Scams
If you believe you were targeted by a fake collection agency, file a complaint with the Federal Trade Commission and your State Attorney General. With enough evidence, the FTC may file a lawsuit against the scammers and try to recover any money that was part of the scam.
Dealing With Legitimate Collection Agencies
Confirming whether a debt collector is a scammer is only the first step. You also have a right to know whether the debt is real and whether you're obligated to pay the collector. Write a letter to the collection agency asking for debt validation. They're required to send back proof or stop all collection activity—that includes reporting the debt to a credit bureau.
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LaToya Irby is a financial writer with over 14 years of experience. She's been quoted and published as a credit expert in several major publications including USA Today, U.S. News and World Report, TheBalance.com, and The Chicago Tribune.