debt collection scams

How to Identify Debt Collection Scams and What to do About it

All over the world, people keep receiving telephone calls from strangers who claim to be debt collectors, and these said debt collectors seek to receive loans.

These calls are often for loans that customers have never obtained or for loans they have acquired, but for sums that they do not owe.

Last year, FTC filed a lawsuit against over 15 groups operating a fake debt collection scheme. Statistics have proven that one of the most predominant frauds of 2018, 2017 and 2019 has been of debt collection scams.

debt collection ftc complaints

You need a way to decipher between actual collection agencies and fraudulent ones if you’ve been getting debt collector phone calls or letters, so you don’t get scammed.

Types of Debt Collection Scams

Suspicious Telephone Calls

Top Spammers in US

Suspicious phone calls are the first stage of a debt collection scam. On the other hand, the subject can say that person is a licensed debt collector, and may or may not be a dedicated representative of a legally licensed debt collection agency.

The “debt recovery agent” might argue that he is a representative of a DCA, a private debt solicitor’s business, or even a government agency when he is none of these.

If a person refuses to pay or doesn’t pay as soon as possible, they may threaten him/her with the seizure of property, wage garnishment, even detention. Debtors should note that these activities are unlawful and that inability to pay up loan does not mean you’d be sentenced to jail.

Harassing Letters and Emails

Debt collection scams may also consist of numerous threatening written notifications, consisting of a harsh tone, insulting words, and warnings of non-existent legal proceedings. To hide facts or present a false one, if the organization is not legitimate, it may use a different trade name. If one receives such an e-mail/letter by the creditor, he must submit a letter of debt confirmation.

Non-legal in-house visits

When a debt recovery agent visits a debtor, the debtor has to ask for the agent’s identification documents. Such an agent may be legitimate but might still try dubious means to reclaim debts owed like, using forceful means, intimidation, or asking for a bribe. A debt collector has no right to access the debtor’s property forcibly or to confiscate his personal belongings.

Even if the agent is allowed to conduct force acts, the High Court must provide him with an official Warrant of Execution. Even if a debt collector agent is allowed to confiscate material objects, he has no right whatsoever to seize the necessary properties of the debtor.

Additional Charges

A borrower may also be asked to pay an excessive amount of interest by a debt collector. Generally, after the creditor has moved the default case to a third-party DCA, a recovery agency has the right to seek payment from the debtor. However, suppose such an entity charges a higher amount to the debtor than the amount stated by statute, then in that case, the debtor should immediately contact the legal authorities and complain because such activities are known as scams for debt collection.

Signs its a Scam

Common Identity Theft

Withholds information from you

A debt collector would tell you details such as the creditor’s name, the amount owed, and that the debt collector may need to seek proof of the debt if you dispute the debt. If during initial communication with you, the debt collector does not provide this information, they are obliged to give you a written notice within five days of that initial contact.

Pressures you to pay by money transfer or prepaid card.

Scammers prefer these payment methods because they could be untraceable, and having your money back may be challenging for you.

Says they will tell your family, friends, and employer

By threatening to expose your debts to family, friends, colleagues, or employers, some scammers can attempt to get you to pay. Usually, without your permission, a debt collector is not permitted to tell other individuals about your debt. To try to reach you, they can only ask others about your whereabouts.

You don’t recognize the debt that the person claims you owe money

To make sure the debt is one that you owe, ask questions. Any debt collector who approaches you alleging that you owe a debt or any amount of money is required by law to inform you of some debt details. That data must include:

  • The creditor’s name
  • The amount owed

Tell the caller that you would give a written request to the debt collector and “dispute” the debt whether you feel that you do not owe the debt or that it is not even your debt. You may also give the debt collector a written request to get further debt information.

You Can’t Find Anything on the Internet When You Look up the Phone Number

Searching the internet for their phone number is one way of testing if a debt collector is a scam. You’ll also find web sites where other customers have posted on the debt collector and the organization they are collecting for.

If you look up a phone number and get no results, or if you see people commenting that the business is a scam, then you know that you want to avoid sending any payment to that business.

Asks you for sensitive personal financial information

They’ll ask you for sensitive personal financial information such as your bank account, your Routing numbers, or Social Security numbers. If you are sure they’re not real, then you should never give your personal financial details to them. Your data can be used by scammers to commit identity theft.

Calls you at Inconvenient Times

At an odd time or place they know is inconvenient for you, debt collectors will not contact you. If you get a call before 8 a.m. and after 9 p.m., you might be dealing with a scammer.

The Debt Collector Asks You for Information They Should Already Have

When creditors hire debt collectors, they give them a certain amount of information about you. Your name, address, date of the birth, account number, and some or all of your Social Security number often include that.

Be wary of a debt collector who asks for any of this information

Not every fake debt collector attempts to trick you into submitting a debt payment. Many seek private data that they can use to commit fraud or identity theft, a method known as “phishing.”

The caller demands immediate payment

A certain amount of coercion can be used by most debt collectors to persuade you to repay the debt. But be wary of, particularly they use scare tactics, a debt collector appears to use an extraordinary amount of leverage to get you to pay instantly.

What to do if You Think it’s Scam

If you think that a caller may be a fake debt collector:

Ask for a callback number

You can request the caller’s name, business name, street address, and a callback number if you’re uncomfortable providing any information. Before sharing any personal information, you can use this information to check that they are not a scammer. If a caller refuses to send any of this data to you, do not pay!

Also, it could be a scam if you call back and the business doesn’t respond as the name they gave you, or it’s a non-functioning number.

Stop speaking with the caller

Send a letter requesting that the caller stop calling you if you have the caller’s address, and keep a copy of your files. By regulation, if you ask them to in writing, actual debt collectors must stop calling you.

Do not give the caller personal financial or other sensitive information

Until you know who you’re dealing with, never give out or confirm personal financial or other confidential details, such as your bank account, credit card, or social security number.

Scam artists can use your data to commit identity theft, such as fake debt collectors, charging your current credit cards, opening new credit cards, checking or savings accounts, writing fraudulent cheques, or taking out loans on your behalf.

Contact your creditor

If the debt is legitimate – but you think the collector may not be – contact your creditor about the calls. Share the information you have about the suspicious calls and find out who, if anyone, the creditor has authorized to collect the debt.

If the debt is legal, but you think the person trying to receive it is not the genuine borrower or creditor, then you should notify the creditor about the calls. Share the details you have about the suspicious calls and find out if the creditor had sent anybody or any agency to collect debts from you.

Report the call

Contact the FTC and your state Attorney General’s office with details about suspicious callers. In addition to the federal FDCPA, several states have their own debt collection rules. The office of your Attorney General will assist you in assessing your rights under the law of your country.


The lender can also employ a debt collection service to try to get you to pay if you owe money. So, some of the debt collectors are actual, and they operate on behalf of the business you owe money. Real debt collectors do have to follow the rule, however. And as a customer, you’ve got rights. And to stay out of scams, you should take safety precautions.