How to spot debt collection scams
The FTC calls this “phantom debt collection”. You receive a call from someone claiming to be a debt collector, law enforcement officer, lawyer or bailiff. They insist you have an overdue payday loan, credit card balance, or some other sort of consumer debt and demand immediate payment of hundreds or thousands of dollars, threatening legal action or death. impending arrest if you don’t comply.
Sometimes such situations result from a mistake in identity: a legitimate debt collection agency makes a mistake, mistaking a consumer for a debtor with a similar name (an error known as “labeling the debt. “). Often, however, he is a con artist, combining personal information gathered from sources such as old loan applications and hacked accounts to fabricate bogus debt that consumers could be tricked into believing. are real. Some large-scale traders pack these bogus liabilities in wallets and sell them to debt brokers for collection.
In recent years, federal and state authorities have increased the pressure on abusive collectors and phantom debt predators. A joint repression by the FTC, other federal agencies and authorities in 16 states produced more than 50 cases in 2019 and 2020, bankrupting many collectors and securing multi-million dollar judgments.
But the problem remains widespread. In 2020, the FTC received more than 53,000 consumer reports of collectors using abusive or threatening tactics or trying to collect money that was not due, an 8% increase from 2019.
- A suspected debt collector is threatening to have you arrested, which the Federal Bureau of Consumer Financial Protection (CFPB) says legitimate collectors shouldn’t do.
- The appellant demands immediate payment.
- The caller wants you to pay by gift card, wire transfer, or prepaid debit card. These are methods favored by crooks because they are difficult to trace.