Being contacted by a debt collection company is a stressful, frustrating, and sometimes frightening process. These entities often provide very little information about the debt that they claim is owed. In addition, it is not uncommon for the representatives to be forceful and persistent in their efforts, projecting an authority that confuses many consumers. Some borrowers go to extreme lengths to meet the collector’s demands–such as sending checks or providing bank account information–in order to make the calls and letters stop.
Far too often consumers end up paying for supposed debts that they do not even owe. This may be a result of mistakes made by the collection company or, in other cases, it may be caused by outright fraud perpetrated by scam artists. In fact, some observers have noticed a recent increase in the number of scammers who are using fake debt collection claims in order to steal funds from unsuspecting consumers. Considering that many borrowers make lots of payments each month and have significant debt, it is not surprising that scammers are exploiting the situation for their own gain.
Debt Collection Scam
“Scambook” is an online complaint resolution website that provides a forum for consumers to make inquiries into all sorts of suspicious charges to their accounts. Recently, the website discussed the issue of fake collection agencies and the common tactics used by these fraud artists when attempting to trick people out of money.
In most cases, the scam starts with a call. The caller will sound official and claim to represent some fictitious company (i.e. “Loan Verification Services”). They will proceed to explain that payment is owed or suggest that a previous payment did not go through and a new one needs to be made. These calls often continue until the consumer pays up or takes steps to verify the caller’s information.
According to the Federal Trade Commission, in one recent two year period, consumers filed more than 4,000 complaints with the FTC and state attorneys general about fraudulent debt collection calls.
In one such scam, callers from India sought payment from consumers by falsely claiming that they owed payday loans. The collectors used tactics in direct violation of the Fair Debt Collection Practices Act, including posing as law enforcement personnel and threatening to jail consumers or cause them to lose their jobs. Because personal information on the victims had been gained from websites catering to people seeking online payday loans, many unfortunates were intimidated into making payments they didn’t owe or the caller had no right to collect. During the two years in which the scammers operated, they took in more than $5 million from victims. To access a report from the FTC on its response to this scam., click here.
Ask Questions & Get Help
There are steps you should take that will help prevent being taken advantage of by one of these scams. In most cases it all comes down to demanding more information and asking questions. Never accept vague information presented by a caller claiming to be from a debt collection company. Request documentation from the original creditor regarding the debt, account, and previous payments.
Similarly, do not fall for harsh language or threats made by these callers. It is not uncommon for scammers to claim that there is a warrant out for your arrest or that you may face jail time if you do not meet their demands. Alternatively, never send money in suspicious ways, by providing bank information over the phone or sending money via money transfer (Western Union).
Do not go it alone. There are very specific legal rules that apply to debt collection company practices. There are limits on what they can and cannot say, who they can call, and when they can call. A debt collection defense attorney can explain if any company violated those rules in your case. The legal professional can also act on your behalf to ensure the claims made by the company are legitimate and supported by proper documentation.