What You Need to Know about Debt Collection Scams
Facing legitimate debt collection can be an intimidating experience, but things are even worse if you’re the victim of a debt collection scam.
It may be a scam if:
- They won’t accept certain forms of payment.
- The collector is vague about who is or she is and where they are calling from.
- They cannot give you the original creditor information.
- They demand immediate payment.
- They threaten arrest.
- You are only dealing with one person the entire time.
If you believe it may be a scam. Do not give them any personal information or Money.
It’s common for people to fall behind on their credit card payments and when this occurs, debt collectors have a right to contact you and ask for payment. This is not a scam: you owe money and the institution to whom you owe that money has a right to collect.
Scams occur when “debt collectors” attempt to collect money to which they are not entitled. Either a debt legitimately existed and has expired or the debt never existed to begin with. Sadly, there are a significant number of scam debt collectors out there and in order to avoid being scammed, you need to not only understand your own debt situation, but also the laws concerning debt collection.
Debt Collectors are Frequently Reported for Unlawful Behavior
Debt collectors generate more complaints with the FTC, Better Business Bureau, and state Attorneys’ General offices than any other type of business or industry. Granted, there are people who are legitimate debtors and file complaints because they don’t understand their responsibility or they are hoping to get out of paying their debt. But there are also a number of scam debt collectors that are reported for breaking the law.
The bottom line is some debt collectors will go to any length, including breaking the law, in an effort to get money from you. They assume that for every group of consumers who understand the law, there are at least a few who don’t and will be willing to pay out of fear or confusion.
What makes the situation even more disturbing is that many of the people who are conned into paying are already in a tough financial situation. They might have disorganized finances or be confused about how debt collection works, and the scam debt collectors prey on them. Their financial situation worsens and they have fewer and fewer options for dealing with their legitimate debt.
Fair Debt Collection Practices Act
The most important thing anyone can do, whether or not you believe you are being victimized by a debt collection scam, is to understand your rights under the Fair Debt Collection Practices Act. This is a federal law in place to protect consumers from scam debt collectors. The law applies to personal, family, and household debts (so not business debts), including car loans, medical care, and consumer charge accounts.
Those governed by the Fair Debt Collection Practices Act include any person or organization attempting to collect on a debt. So, in addition to standard debt collection agencies, the law also applies to law firms working on behalf of lenders and debt collectors.
The law governs how a debt collector can contact you and what measures he or she can take during that contact. For instance, you can be contacted by a debt collector via mail, telephone, telegram, fax, or in person. A debt collector is not, however, permitted to contact you through any of these methods at “inconvenient times,” including before 8 am or after 9 pm (unless you give them permission to do so). Debt collectors are also not supposed to contact you at work if you have told them not to do so.
You can stop debt collectors from contacting you, even if the debt is legitimate, but sending a letter to collector requesting they cease contact. They may contact you one additional time after receiving the letter to tell you there will be no further contact. Keep in mind this doesn’t put an end to a legitimate debt, and it will likely result in you being sued for the debt. The other option you have for stopping collection calls is to file for bankruptcy, which creates an automatic stay and stops all debt collection attempts.
Disputing a Debt
If you believe you are being scammed and you wish to dispute a debt, you have a few options. Start by writing to the debt collection agency about the debt (ideally within 30 days of their contacting you) and inform them you are disputing the debt. The debt collector must stop contacting you upon receipt of this notice of dispute until it is able to send you verification the debt is legitimate. This is often the only step that is needed to end a debt collection scam targeting you. Obviously, it’s impossible to verify a scam debt.
Debt collectors, whether they are perpetrating a scam or not, are forbidden by law from:
- Threatening you with violence
- Publishing your name for refusing to pay a debt
- Repeatedly calling to annoy you
- Using obscene or profane language
- Falsely claiming they are attorney or government agents
- Misrepresenting what you owe
- Claiming you have committed crime
- Claiming they work for a credit reporting company
- Misleading you about any hard copy information they send to you concerning the debt
Essentially, debt collectors need to be 100 percent honest about anything they say to you, and they cannot threaten anything that is not legitimately within their right to do. If you believe a debt collector is breaking the law, even if you are responsible for a debt, you have a right to take legal action.
Debt Collection Scams
One of the most common debt collection scams is attempting to collect on old debts. This is a popular scam because it plays off of a legitimate debt. It’s not as if the scammer needs to convince someone they had a debt – the debt existed, but the time to collect on it has expired
Debt collectors have only a certain amount of time to collect on debts, but many consumers do not realize a debt can expired.
Another popular scam is to attempt to hold someone responsible for an old debt that was held by a previous homeowner or renter. You might have never been responsible for a debt, but because you happen to live where the responsible party once lived, the debt collector tries to hold you accountable.
If you are concerned you are the victim of a debt collection scam, we can help. Contact us at 1.800.220.4318 for more information.