Getting a call out of the blue with an intimidating voice on the other end demanding payment for a debt can be frustrating and frightening. But how can you be sure if the call is a legitimate debt collector, and not a scammer simply trying to scare you into making a payment or giving up your sensitive personal information? 

According to data from the Federal Trade Commission (FTC), there were more than 1.4 million fraud reports in 2018 alone — and those affected reported losing $1.48 billion, in total. Debt collection scams were among the most commonly reported sources of fraud, according to the FTC, alongside imposter scams and identity theft. 

Debt is a fact of life in America, and millions of people deal with legitimate debt collection attempts and messages from creditors daily. Debt collection scams have risen up in the shadow of the real thing, as a way for scammers to pressure consumers into making payments or giving up private identifying information, using the very real and very common threat of debt as leverage. 

There are countless stories of scammers posing as debt collectors to get what they want from unsuspecting consumers. Consumer information site WalletHub, for instance, highlights one noteworthy case from 2014, in which “seven employees at a company located in Georgia… were charged with committing debt collection fraud.” Their methods? “ Impersonating legal personnel under multiple aliases, such as FBI agents or Justice Department workers, they managed to collect over $4 million from intimidating 6,000 people with legal prosecution,” according to WalletHub. 

The FTC lists other common forms of illegitimate debt collection:

“Consumers across the country report that they’re getting telephone calls from people trying to collect on loans the consumers never received or on loans they did receive but for amounts they do not owe. Others are receiving calls from people seeking to recover on loans consumers received but where the creditors never authorized the callers to collect for them.”

So, what can consumers do to stay on high alert, separate fact from fiction, and defend themselves from phony debt collection attempts? 

Warning Signs of Debt Collection Scams: What to Watch For

According to consumer protection experts, scammers are increasingly using more sophisticated methods to dupe innocent people — yet there are still some common “red flags” and warning signs to watch out for. Here are a few indications that a “caller may be a fake debt collector,” according to a report from the FTC: 

  • The caller “is seeking payment on a debt for a loan you do not recognize”
  • The supposed debt collector refuses or is unable to give you important contact information, such as a mailing address or phone number
  • The caller asks you for “personal financial or sensitive information,” such as your social security number or bank account information 
  • The supposed debt collector “exerts high pressure to try to scare you into paying” as quickly as possible, such as “threatening to have you arrested or to report you to a law enforcement agency,” or threatening to get in contact with family members or your employer
  • The supposed debt collector is pressuring you to pay quickly via wire transfer or by purchasing a prepaid debit card — payment methods that are often preferred by scammers 

With this being said, the FTC warns consumers that “it may be hard to tell the difference between a legitimate debt collector and a fake one. Sometimes a fake collector may even have some of your personal information, like a bank account number.” 

With that in mind, consumer protection experts advise always exercising caution, and doing as much research as possible before responding to the debt collector. 

Do You Suspect a Fake Debt Collector Is Contacting You?

If you have suspicions about a debt collection notice, consumer protection experts encourage taking a step back and proceeding with caution. There are numerous steps you can take to protect yourself — and your most sensitive information — from scammers, starting with determining if the debt collector is legitimate. 

The Consumer Financial Protection Bureau (CFPB) lists a few ways that consumers can protect themselves from falling victim to a debt collection scam. As the CFPB explains, it can help to be proactive, and do as much research as possible by taking steps like: 

  • Asking for the caller’s name, a company name, callback number, street address, and other contact information. If the person contacting you cannot or will not provide this information, that’s a significant red flag that they may not be a legitimate debt collector. Similarly, if the information they provide does not seem accurate or truthful after you research it online or with local consumer protection agencies, this is a sign that it could be a scam, according to the CFPB. 
  • Making sure you have been given information about the debt before you pay.  Legitimate debt collectors will send you relevant information in writing, including a validation letter, swiftly and without hesitation. 
  • Contacting the original creditor. If you’re being contacted by a debt collector claiming to represent a creditor, reach out to this creditor directly. This way, you can “find out who has been assigned to collect the debt,” as the CFPB explains. 
  • Checking your credit report. If you’re being contacted about a debt that you’re unfamiliar with, the CFPB encourages obtaining a credit report from one of the three major credit reporting agencies (consumers are entitled to one free credit report from each of the major bureaus per year). If a debt is not listed, this may be a warning sign that the debt collector is not telling the truth. However, the CFPB also encourages consumers to bear in mind that “not all debt collectors and creditors provide information to the credit reporting companies… If the debt is not on your credit report, that does not necessarily mean the debt is not valid.”
  • Understanding your rights. As the CFPB notes, “the Fair Debt Collection Practices Act prohibits debt collectors from engaging in a variety of practices, such as misrepresenting the debt, falsely claiming to be a lawyer, or using obscene or profane language when trying to collect a debt.” Look into FDCPA, and other state debt collection laws and regulations that may be in play in your area. If the supposed debt collector is violating these rules, it could be a sign that they are not legitimate. It may help to consult with a legal professional to understand your rights under FDCPA, including the actions you can take against harassment by debt collectors.

The FTC recommends a similar course of action, and encourages consumers to closely safeguard their personal financial information if they are contacted out of the blue. As the FTC puts it in a post: 

“Never give out or confirm personal financial or other sensitive information like your bank account, credit card, or Social Security number unless you know whom you’re dealing with. Scam artists, like fake debt collectors, can use your information to commit identity theft – charging your existing credit cards, opening new credit card, checking, or savings accounts, writing fraudulent checks, or taking out loans in your name.”

The FTC and other consumer protection experts also stress the importance of quickly reporting any suspicious activity or calls you believe to be fraudulent to the FTC, the CFPB, and your state Attorney General’s office. 

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Have any more questions about avoiding debt collection scams? Facing the prospect of dealing with legitimate debt collectors and not sure where to turn? Looking for a Chicagoland lawyer you can trust? Don’t hesitate to get in touch whenever you’d like to get the conversation started.