Is that debt call legit?
That angry voice on the phone insists you owe a debt you’ve never paid. But you don’t recognize the debt or the collector.
Before you apologize or promise to pay, consider another scenario: It’s not your debt at all.
It could be a con — a ruse by a clever scammer. Or it could be a case of “tagging,” in which a collector chases you for a debt that belongs to someone else.
Both scenarios pose problems for consumers, advocates and regulators.
“It’s increasingly becoming more common,” says Nadine Samter, an attorney with the Federal Trade Commission. Much of it is unintentional: debt buyers who haven’t done their due diligence, she says. But some of it is phishing, she says. Con men “get an account number and just try and get money.”
So how can you tell if that letter or phone call is a genuine debt, a case of mistaken identity or a scam? There are a number of handy tricks you can use. Here are eight.
Shift the conversation
Whether it’s a real debt or a scam, the caller is going to ask questions. Put on the brakes and ask a few of your own. A legit collector will answer.
“No matter who calls you, you don’t give out account information and you don’t confirm information,” Samter says.
Legally, the onus is on the caller to provide the details to back up the claim. “You need to ask what the debt is from,” says Sonya Smith-Valentine, an attorney with Valentine Legal Group LLC in Largo, Md., which represents consumers in debt collections.
“They’ve got to give you some basis” for the debt, she says. “If they’re not doing that, there’s something wrong. You want to turn the conversation into a fact-finding mission on your end. Keep peppering them with as many questions as possible.”
A real collector should provide the basics: name, company name, address and phone number.
But scammers might refuse. “Sometimes they will say ‘no,’ or that they’ve already sent the information,” Smith-Valentine says. “Sometimes they’ll come out and say, ‘We don’t have to.’ But that’s not true. If somebody is pushing back that hard, it should set off some red flags.”
A genuine debt collector has five days from the first phone call to send you written confirmation of the debt. Most send the letter first, then call, says Joel D. Leiderman, senior associate attorney with Forster & Garbus LLP in Commack, N.Y., which handles debt collections for creditors.
That confirmation letter should be more than a demand to pay, he says. It should also spell out some of your own rights and include information on the collection agency, such as the company name, mailing address and phone number, Leiderman says.
Verify that the agency exists
Just because the collection agency is legit doesn’t mean the debt is yours. Collectors do make mistakes. But at least you can make sure the debt isn’t an outright scam.
Plug the company name and/or the phone number into an Internet search engine. Contact your state attorney general’s office or department of consumer affairs. Is the company licensed or allowed to work in your state? Have there been complaints about it?
If the collector claims to be with an attorney’s office, check out the firm with the state bar association or the office of court administration, Leiderman says.
If it is legit, you may also want to call and verify that the company contacted you. Some scammers will claim to be from genuine collection firms or attorney’s offices, he says.
At the same time, you don’t want to share any personal information until you decide how you want to handle the matter.
Pull your credit report
“Consumers ought to be checking their credit reports at least once a year,” Samter says.
Credit reports can provide a quick snapshot of your current debts. All your current creditors are listed, along with their contact information and your obligations to them. Unsettled debts generally stay on for seven years. You can get each of your three reports free every year at AnnualCreditReport.com or by calling (877) 322-8228.
So if someone alleges you owe money and it’s not listed there, there’s a good chance it’s a scam, a case of mistaken identity, or a real debt that is past the statute of limitations for collections (often three to six years, depending on the state where you live).
Just because the debt is listed there doesn’t mean it really is yours. In “tagging” situations, sometimes collectors have been known to list the debt on an innocent third party’s credit report.
One more clue: Along with debts, look at the inquiries listed on your credit report, says Smith-Valentine. What you’ll find out: if the collector in question has viewed your credit file.
Check your state’s statute of limitations
If the statute of limitations has expired, the collector can’t make you pay. Collectors (and the original creditor) are barred from using forced-payment options like judgments, liens or garnishments.
In addition, seven years after you went into default, the debt has to come off your credit report — even if it’s sold to collectors. No matter who owns it or when they bought it, it can’t be listed on your history or used to compute your credit score.
In most states, debts can stay on your credit report longer than collectors can force collection. So a debt listed on your credit history doesn’t automatically mean that the collector can compel you to pay it.
Some collectors will try to trick consumers into reaffirming expired debt, which restarts the forced-collection clock. Some reaffirmations include: acknowledging the debt verbally or in writing, making an arrangement or making any payment.
“Consumers should be careful that they don’t unintentionally reaffirm a debt,” says Samter. “That starts the whole ball rolling again.”
The statute of limitations varies depending on the state and the type of debt. To check the rules in your state, contact the state consumer affairs or attorney general’s office.
Send for verification of the debt
After you’ve been contacted by a debt collector, you have 30 days to demand proof that it’s a real debt and that it belongs to you, Leiderman says. If the debt isn’t an outright con, you want to get verification.
“A debt collector has to hold off any attempts to collect until he’s verified the debt,” says Leiderman.
Send your request with a return receipt requested so that you can document your request and the date it was sent. But don’t include any personal information, Samter says.
As a return address, consider using a post box or office address instead of your home, Smith-Valentine says. That way, you’re not giving a possible scammer or tagger more information.
Make sure you get real proof
The verification you receive could take many forms. It could be a copy of your contract with the original creditor, a copy of the charge-off statement or an invoice from the original creditor. Or it could simply be information about the debt, like the original creditor’s name, the account number, charge-off amount and current balance. The collector should also be able to furnish at least the last four digits of your Social Security number.
What constitutes legal verification has “never been fully clarified,” Samter says, adding that her office has seen cases where dishonest collectors dummied up invoices. “But they had no underlying documentation that they got from the creditor. And that’s the information the consumer should be seeking. You may not always be able to get a creditor to give that information, but you might.”
“If they can’t produce something that ties you to the debt, why should you pay it?” Samter says. “It means they’re not going to be able to prove it to a court, either.”
Determine if it’s yours — and theirs
When you receive your the verification information, read it carefully. Check out the billing address (if it’s included), the styling of your name, the middle name or initial listed, and even designations like “Jr.” or “Sr.” If anything’s off, it could be a case of mistaken identity or a scam.
You also want to make sure the debt is being handled by the agency that contacted you. There have been instances where more than one collection agency went after the same debt, Leiderman says. The problem for the consumer is that money paid to anyone but the official agency doesn’t count.
The best way to do that is to “follow the chain of title,” says Smith-Valentine.
“I would start with contacting the original creditor,” she says. If they don’t own it anymore, they can usually tell you who they sold it to, she says. And, says Smith-Valentine, if it’s been sold a few times, you just work your way down the line.