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How to spot debt collection scams: 8 signs to watch out for

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Published on September 16, 2024 | 7 min read

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Key takeaways

  • Scammers use texts, calls, emails and letters to create a false sense of urgency about debt repayment.
  • Always ask for detailed information about the debt and the debt collector’s contact details to confirm their authenticity.
  • Get familiar with the Fair Debt Collection Practices Act (FDCPA) to know what practices are prohibited and how debt collectors can interact with you.
  • Never share sensitive personal information with unverified debt collectors.

Every year, consumers across the U.S. get calls from people claiming to be debt collectors. While many of these calls are legitimate, a rising number are not. Each day, scammers call, text and send letters to unsuspecting individuals, using scare tactics to convince them to hand over their hard-earned cash.

It’s sometimes tough to tell the difference, especially when the caller knows enough to sound convincing. To protect yourself from financial harm or identity theft, it’s wise to get to know some of the signs.

8 warning signs of a debt collector scam

Receiving a call, email or letter from a company purporting to be a debt collector can spark alarm. Before disclosing any information, look for these eight signs of a fake debt collection scam.

1. The contact information is suspicious

Legitimate debt collectors will typically offer contact information you can easily verify. Be wary if the phone number or email address seems suspicious or hard to trace.

Scammers often use unidentifiable or frequently changing contact details to avoid detection. Research the contact information provided to check if it’s linked to a reputable agency.

If you cannot confirm the authenticity of the supposed debt collector’s contact information, don’t respond further until you can confirm the debt collector is legitimate.

2. You don’t recognize the debt

If you do not recognize the debt, verify that it is real and belongs to you. You may still owe a debt and simply not recognize it. However, scammers may make up debts, claiming you owe money when you don’t.

Legitimate collectors are obligated to provide detailed information about the debt upon request. If the presumed debt collector refuses to give you information to verify it, be suspicious. Before you pay anything or give out personal information, ask probing questions to confirm the debt is legitimate.

Sometimes, even a legitimate debt collector may incorrectly attribute a debt to the wrong person. If your financial information was stolen or someone else opened a credit card in your name, a reputable agency might be within its rights to attempt to collect the debt. If so, you’ll need to pursue help for identity theft. Understanding how long debt collectors can pursue old debt may also be helpful, as this may offer further protection.

If the contact comes from a legitimate debt collection agency but the debt doesn’t belong to you, dispute that you owe the debt. If you have gathered enough information to be sure it’s a fake debt, don’t respond to the scammer.

3. They withhold information

Real debt collectors must provide essential details during their first contact with you. This is called “debt validation” and is regulated under the Fair Debt Collection Practices Act (FDCPA).

A legitimate debt collector usually provides debt validation through a letter before they reach out via other communication channels. The information a debt collector must validate includes:

  • The name of the creditor.
  • The amount owed.
  • The procedure to dispute the debt.

If a collector withholds this information or fails to provide it immediately, this may be a sign of a scam. Even if it’s not outright fraud, a debt collector has no right to take your money if they cannot validate the debt.

4. They request an unconventional payment method

Scammers often use coercion tactics to provoke immediate payment. They may pressure you to pay through money transfers or prepaid cards because these methods are difficult to trace.

Here are some of the unconventional payment methods scammers might request:

  • Cryptocurrency (Bitcoin, Ethereum, etc.)
  • iTunes, Google Play or other digital gift cards or virtual currency
  • Money transfers
  • Prepaid cards (like Visa® or Mastercard® gift cards)
  • Wire transfers

Stop communication immediately if a debt collector insists you use one of these payment forms. This is an almost certain indicator of fraud.

5. They threaten harsh consequences

Be wary of debt collectors who threaten jail time or pose as government officials. While failure to pay legitimate debts can lead to legal consequences, collectors should not issue threats they cannot enforce.

The FDCPA forbids debt collectors from behavior that aims to “harass, oppress or abuse” individuals to collect a debt, regardless of whether the debt is legitimate or not.

“Legitimate debt collectors may sometimes be aggressive, but scammers often use fear to get you to act quickly and not ask any questions,” says Thomas Nitzsche, a senior director of brand and media at Money Management International. “If they’re threatening you with jail time — or worse — that’s a violation of your rights and a major red flag.”

If you are threatened, report the incident to the appropriate authorities. You can contact your local consumer protection agency, the Federal Trade Commission (FTC) or your state’s attorney general’s office for assistance. These organizations can offer guidance on how to proceed and help protect others from similar scams.

6. They violate your privacy

A debt collector can’t disclose your debts to third parties without your consent. If a collector threatens to reveal your debts to family, friends, coworkers or employers, it is a sign of a scam.

These signs may be more apparent when you know how to deal with debt collectors. Scammers and unethical debt collectors use what they can to get you to pay. Protect your privacy by refusing to engage with collectors, real or not, who threaten to break confidentiality.

7. They request sensitive information

When collectors request sensitive personal financial information, such as bank account numbers or Social Security numbers, that’s a red flag. These details can be exploited for identity theft or other fraudulent activities.

To protect yourself, only share such sensitive information with verified individuals or organizations that have a legitimate and necessary reason to know. It’s better to pay through methods that don’t require sensitive numbers, such as with a credit card.

8. They reach out at unreasonable times

Debt collectors are only permitted to contact you at your residence or workplace between 8 a.m. and 9 p.m. in your local time unless you’ve directed otherwise. Receiving calls outside these hours is a strong indication of a scam.

Legitimate debt collectors will respect your boundaries and avoid calling at inconvenient times. If you receive calls outside the allowed times or if you suspect any fraudulent activity, it’s best to stop all communication immediately.

How to protect yourself from debt collector scams

You can take steps to protect yourself when you’re unsure about a debt collection call. If you are legally obligated to pay a debt in collections, you should. But you don’t want your money to be taken by a scammer.

Here’s what you can do if you receive a debt collection text, call, email or letter:

  • Get contact information. Request the caller’s name, company details, street address and a callback number. Once you have it, do an internet search to make sure the information pulls up a legitimate business. If the information doesn’t match or the number is nonfunctional, it might be a scam.
  • Confirm you owe the money. Before making any payments, request information about the debt or a written notice that verifies what you owe and to whom.
  • Contact the original creditor. If you’re still suspicious, contact the creditor the debt collector claims to represent. They should be able to confirm that they assigned your debt to collection.
  • Check your credit report for the debt. AnnualCreditReport.com allows you to obtain a free credit report from each major consumer reporting company weekly. Claim your reports online, then review them carefully to see if the debt is listed.
  • Familiarize yourself with the FDCPA. This law prohibits deceptive or abusive practices by debt collectors. Remember, you have rights regarding how debt collectors can interact with you. If you believe your rights have been violated, report the collector to the Consumer Financial Protection Bureau (CFPB) or your state’s attorney general’s office.
  • Stay informed about your legitimate debts. Monitor your credit report, regularly review it for accuracy and report any discrepancies immediately.
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Staying ahead of scams is the best way to avoid them. If you’re unsure what to look for with the credit bureaus, learn how to read a credit report. Any time you notice errors, dispute them or get help from a reputable credit repair company.

What to do if you are a victim of a debt collection scam

While you may be tempted, avoid retaliation if you’re the victim of a debt collection scam. You never know what type of person is on the other side of the conversation. If you encounter a debt collector scam, don’t engage. Instead, protect yourself and report the incident. Here are a few tips for successfully dealing with the situation.

Keep a paper trail

Maintain detailed records of your communication with the scammer(s). Note the date and time of each call, and save all written correspondence you receive from the company (texts, emails and letters). If it’s legal in your state, record the phone calls. The more information you have, the stronger your complaint will be.

Contact local law enforcement

Reach out to your local police or sheriff’s department and report any suspected criminal activity associated with the scam.

While local authorities may not always be able to help immediately, it’s best to document crimes with law enforcement. Plus, local police may be able to help you reach out to other authorities and advise you on how to protect yourself.

File a complaint

Report the scam to relevant authorities to prevent similar incidents in the future:

Alert credit reporting agencies

If you have given out any sensitive information to the scammer, make sure the major credit reporting agencies know fake debt collectors targeted you. You may want to place a fraud alert or credit freeze on your credit report. Contact Equifax, Experian and TransUnion — the three major credit bureaus — to initiate these processes.

Each situation is unique, and you may need the help of a qualified professional. Consider contacting an attorney or certified public accountant for legal and financial advice about your circumstances.

The bottom line

Scams involving debt collectors pose a real risk. By learning to spot the warning signs and understanding your rights, you reduce the risk of being scammed.

Remember to always double-check the legitimacy of debt collectors and seek advice from financial experts if something doesn’t seem right. It’s always better to be safe than sorry.

Frequently asked questions