Are you receiving a call about a debt that you do not recognize? Before you panic (or pay up), make sure you’re dealing with a real collector. The California Department of Financial Protection and Innovation reports an increase in the number of bogus debt collectors targeting consumers.
A real debt collection agency will send you written proof within five days. A scammer demands payment within five minutes.–Steve Rhode
How the scam works
Fake debt collectors will contact you by phone, text, email, or mail claiming you owe money. The fault may be:
- Completely made up
- Someone else’s fault (they got the wrong person)
- Already canceled or settled
- Discharged in bankruptcy
- Expiration date (time barred)
They bet you’re scared enough to pay without verifying anything.
Red flags: how to spot a fake collector
- They refuse to give you their name, company or license number
- They demand immediate payment or threaten arrest
- They want payment via gift card, bank transfer or cryptocurrency
- They threaten to tell your employer or family
- They use profanity or aggressive intimidation
- They don’t know any basic information about you or the debt
Legitimate collection agencies are legally obliged to identify themselves and verify the debt in writing within five days.
What real collectors can’t do
Under the Fair Debt Collection Practices Act (FDCPA), legitimate debt collectors are prohibited from:
- There is a threat that you will be arrested
- Impersonating a lawyer or government official
- The use of obscene or insulting language
- Repeatedly calling to harass you
- Discussing your debts with family, friends or employers (except in limited circumstances)
- Collect more than you are legally owed
What to do when someone calls
- Stay calm. Don’t let fear dictate your decisions.
- Get their information. Ask for the collector’s name, company name, telephone number and address.
- Request written verification. They are legally required to send this within five days of their first contact.
- Check your credit report. Get your free annual report at AnnualCreditReport.com to see if this debt shows up.
- Contact the original creditor. If they claim you owe a particular company, call that company directly (not the numbers the debt collector gives you).
- Don’t pay anything until you verify it. Once you pay a fake collector, that money is gone.
If you have been scammed
If you have given a fake collector money or personal information:
- Please contact your bank immediately if you paid by debit card or bank transfer
- File a complaint with the FTC at reportfraud.ftc.gov
- File a complaint with the California DFPI
- Place a fraud alert on your credit reports (contact Equifax, Experian or TransUnion)
- Consider a credit freeze to prevent new accounts from being opened
The bigger picture
Scammers target people who are already stressed about money. They count on shame and fear to override your judgment. Remember: Even if you have real debts, you have rights. And paying a scammer doesn’t make your actual situation better, it actually makes it worse.
If you’re dealing with real debt collectors and real debt, take the Find Your Path quiz to understand all your options.
Key Takeaways
- The number of complaints about false direct debits is increasing: verify before you pay
- Real collectors must send written confirmation within 5 days
- No legitimate collector asks for gift cards, cryptocurrency or bank transfers
- They cannot threaten arrest or pose as government officials
- If you don’t recognize a debt, it may not be yours at all
- Report scams to the FTC at reportfraud.ftc.gov
Frequently asked questions
Can debt collectors really get me arrested?
No. You cannot be arrested for unpaid consumer debts such as credit cards, medical bills, or personal loans. Debt is a civil matter and not a criminal matter. If someone threatens arrest, it’s either fraud or a violation of federal law. Either way, he or she cannot do what he or she threatens.
How do I know if a debt is actually mine?
Request written verification from the collector. Check your credit reports at AnnualCreditReport.com. Contact the original creditor directly (using a phone number you found yourself, not the number the debt collector gives you). If the debt does not appear on your credit report and the original creditor has no record of it, it is likely a scam.
What if the debt IS real, but I can’t pay?
You still have options. Collectors often accept settlements for less than the full amount. If the debt is old, check your state’s statute of limitations; if it is ‘time-barred’ they can’t sue you. If you are overwhelmed, bankruptcy may be an option to consider a fresh start.
Should I pay off old debts to improve my credit?
Not necessarily. Paying off an old collection bill can essentially restart the clock on how long it appears on your credit report. When a debt is close to maturity (seven years after the first delinquency), paying it off can increase its negative impact. Get advice before paying off old debts.
What should I do if a collector harasses me?
You can send a letter requesting that we stop contacting you (except to notify you of legal action). You can also file complaints with the CFPB, the FTC, your attorney general, and the California DFPI. Collectors who violate the FDCPA can be sued for damages.
(Source: DFPI of California)
#Fake #debt #collectors #California #warns #increasing #fraud