Beware of Debt-Collection Scams

Scammers are adept at finding ways of exploiting financial situations to lure new  victims. One such example is the debt collection scam, where scammers try to trick consumers into paying for debts that don’t actually exist, or by using abusive tactics to collect seemingly legitimate debts.
 
Don’t be the next victim of a debt collection scam. Here’s all you need to know about these scams.
 

How the Scams Play Out

In a debt collection scam, a caller claiming to represent a creditor or a debt collection agency demands immediate payment for an alleged outstanding debt. The caller insists on specific means of payment and may even threaten to tell the victim’s family and friends about the outstanding debt. The alleged debt may be completely fabricated, or the scammer has hacked the victim’s accounts to learn the existence of a real debt. In either scenario, the caller does not represent the creditor and will pocket any “collected” money.
 

How to Spot a Debt Collection Scam

You might be looking at a scam if an alleged debt collector does any of the following:

• Withholds information — a legitimate debt collector is able and willing to tell you the name of the creditor as well as the exact amount owed.
• Threatens the debtor with jail time — barring criminal fines or restitution, there’s no jail time for an overdue debt.
• Insists on specific means of payment, such as prepaid debit card or an immediate money transfer.
• Asks you to share personal financial information — a legitimate debt collector will not ask you to provide your Social Security number or account numbers. 

Protect Yourself

Worried you are being targeted by a debt-collection scam? There are steps you can take to protect yourself.
 
Get contact info: Ask the caller for a callback number. A legitimate collector will not hesitate to share this information. You can also ask for the caller’s name, as well as the name and street address of the company they represent. Be sure to hang up and then try the number the caller shares, as they may have rattled off a nonfunctioning number in the hopes that you wouldn’t actually dial it.
 
Question the debt: Ask the caller to confirm basic information about the debt. The collector should know the exact amount owed and be able to tell you the name of the company behind the debt.
 
Call the lender directly: If you still believe you are being scammed, contact the creditor the collector is claiming to represent and ask if the debt collection has been outsourced to another company.
 

If You’ve Been Targeted

If you believe you’ve been targeted by an illegitimate debt collector, let the FTC know. Report the scam at ftc.gov/complaint. You can also block the scammer’s phone number on your phone and let your friends know about the circulating scam. If a falsified debt appears on your credit report, you will need to dispute the charge as well.
 
The most important thing you can remember with any caller claiming to be someone in authority is to slow down and listen to exactly what you’re being asked to do. Scammers like to rush and scare you into making snap decisions. Take your time. A few minutes of extra thought can be the difference between losing money or your personal information.