A call from a debt collector is an instant anxiety-generating experience for anyone. When they start threatening to get you arrested, take legal action, or cut off an essential service, fear will often force you to comply with their demands. Criminals know this well. This is why many debt collection frauds focus on exploiting fear—a powerful catalyst for action.
Evidently, there is no better time than now for these scammers to find innocent victims. With skyrocketing inflation, job cuts, and economic uncertainties, household debt has steadily risen since the pandemic. Balances in mortgages, auto loans, credit cards, and student loans have all significantly increased. Total balances have grown by $2.75 trillion in the three years since 2019. More people are in debt today. Sadly, this dire predicament has created massive opportunities for scammers, particularly in the area of debt collection.
Debt collection scams now rank among the top three most reported scams in the US. Considering their prevalence, building awareness and learning ways to tackle them effectively could certainly serve you well.
What is a debt collection scam?
This is when a fraudster imitates a genuine collector and intimidates victims into transferring money under the pretext of overdue debt.
These scammers are exceedingly difficult to identify. They could often appear identical to collection agencies that follow aggressive strategies to collect their dues.
A Consumer Financial Protection Bureau survey reveals that one in four debt collectors used threatening behavior, one in three contacted customers during inconvenient times, two in five contacted them at least four times a week, and one in seven threatened to take legal action. But these also resemble the behavior of scam collectors. Naturally, separating the two would not be easy, especially when fear and anxiety take over.
But it doesn’t mean you should readily give in to these scams. You can still protect yourself with sufficient awareness without laying bare your defenses.
Tackling debt collection scams with proven measures
If you come across a fraudulent debt collection call, here’s what you should know to tackle it effectively:
1. Remain calm
Scammers typically use aggression and intimidation to pressure victims into a hasty payment. It is easy to crack, especially when faced with a potential lawsuit or arrest. But remaining calm is important, without giving into a fraudster’s persistent demands.
2. Avoid sharing personal information
Consider it a red flag if a debt collector asks for identifiable or debt-related information. There is no reason for them to verify your identity or check your financial details. They should already have everything they need at hand.
3. Confirm the collector’s identity
Before you react or take further action, verify the caller’s authenticity.
- Ask for their full name, contact number, and address.
- Check their number on PhoneHistory. Ideally, the details you find should match what they provided.
- Search for them on Google and see what turns up.
- Contact the creditor to confirm the collector’s identity and claims.
Be upfront about your intentions and see how the caller responds. A genuine debt collector should not take issue.
4. Request for information in writing
Debt collectors are legally required to provide a validation notice in writing or via email before pursuing you over the phone to collect an overdue debt. If you have not received a formal letter or email from your creditor, then you are likely speaking to an imposter.
So, what should you do? Ignore their bullying tactics and stand your ground. Insist that they provide details about the creditor, debt collector, and debtor together with itemized information on the debt amount, fees, and other charges with relevant dates. The validation notice should also include your rights and how you can dispute should you wish to do so.
5. Understand your rights
As a debtor, you have certain rights. There are regulations to protect you from unfair and unethical practices. For instance, the Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from contacting you between 9 pm and 8 am. It also prevents them from calling you back about the same debt within seven days.
By understanding these, you will be in a better position to protect yourself from both fraudulent and rogue debt collectors. You can find further details about a debtor’s rights on the Consumer Financial Protection Bureau website.
6. Inform authorities
If you suspect a debt collection call was a scam, immediately inform the Federal Trade Commission and the Consumer Financial Protection Bureau. Sometimes, it could be difficult to tell whether a caller is an imposter. But you can still make a formal complaint if they use aggression or obscene language, repeatedly contact you, or place undue pressure.
Documenting your communications is also essential. Keep call records, phone logs, and any notices or emails. Take several copies in case one gets deleted or corrupted. These will be invaluable for officials to investigate.
A final thought
With increased job cuts, rising inflation, and widespread financial difficulties, meeting debt obligations has become a struggle for many Americans. A call from a collector’s agency is hardly an unexpected event and can trigger much anxiety and frustration. But debt collection scams could become a source of even more stress. They could leave you in far worse financial circumstances if left unheeded.
Awareness about identifying and tackling these scams is imperative to protect yourself. Preventative steps are equally important: protecting data is inarguably the most prudent measure to avoid scams and fraud of this nature.
Remember, many scams rely on some form of stolen personal data to identify and target victims. Scammers could steal a discarded credit application or an overdue notice you have misplaced or thrown away. Or they might target you with a phishing attack by posing as a creditor and convincing you to share debt-related details.
Naturally, a holistic approach to data security is critical: strengthen the security of your devices, data files, and physical documents. Practice cautious sharing, whether it is with total strangers or those you know well.
Your data could be the key to unlocking your defenses and making you vulnerable to a debt collection scam. So, take enough precautions and remain vigilant to protect yourself from a potential threat.