You’ve just had a debt collector call you. They say that they’re collecting on a debt that you weren’t aware of. They threaten legal action that could result in the sale of your assets or garnishment.
You’ll likely feel a little flustered but don’t agree to anything just yet. While there are legitimate debt collectors out there, there are also scammers. The scam is simple; they try to scare you into paying and usually threaten to tell your colleagues or family.
Before you make any payments to an agency, you should ensure they’re legitimate. In this post, we’ll look at the warning signs of these types of scams and what you can do about them.
How to Tell the Legitimacy of a Debt Collection Agency
It may sometimes be difficult to tell the difference between a real agency and a scammer. Both will use similar scare tactics to get you to admit to the debt. A legitimate company, however, won’t go quite as far as a scammer will.
Scammers do their homework. They may obtain your credit records and work from these. Most are quite convincing, but sometimes the arguments don’t make sense. According to Balancing Everything, finance companies seldom repossess a car if you’re late on one payment. They’re entitled to but usually allow some breathing room.
Criminals count on you not knowing this. They’ll call you threatening to take back the car if you don’t make an immediate payment.
The test is how much information they’ll provide you. You’re entitled to ask for verification of the debt. This must include the name of your creditor and your outstanding balance. By law, the company must provide you with that information.
Raise a dispute of the debt if you don’t recognize the account. If you do, don’t admit to anything yet. First, get the name and contact number of the agency.
Ask the consultant for a number to call them back on and Google the company to ensure that it’s a legitimate firm. Also, search for the phone number and see if anyone’s reported it as belonging to a scammer.
Call them back, and see how they answer their phones. Pay attention to the name of the firm. If it doesn’t match what they told you, it’s likely to be a scam. Then contact the creditor concerned and confirm that the collection agency is legitimate.
Pull Your Credit Report
The three biggest consumer agencies provide you with a free FICO report every 12 months. Check if there are other questionable debts there, and see if there are arrears. If you’ve been a victim of identity theft, your report should show inquiries and possibly more debt.
This isn’t an absolute solution, however. Your creditors may not report your behavior, or it may already have dropped off your profile due to age.
How to Tell If the Debt Collection Agency Is Fake
A legitimate debt collector should act within the confines of the law. They’re also likely to be willing to work with you to find an amicable solution. If they do not wish to accept a reasonable payment agreement, proceed carefully. Here are some other signs to consider.
They Provide Only Sketchy Details
By law, the company must provide you with information about the debt. It must provide details such as when the account was handed to them, the account number, and how they arrived at the balance owing.
A scammer won’t have the full details, as they’re working off information that they could gather easily. Be very wary if they’re reluctant to provide you with the data you require.
They Require Immediate Payment
They’ll harangue you to try and get you to pay up immediately. You might even pay something to get them off your back. That’s part of the ploy—it suits them to rush you because it gives you less time to think about how legitimate they are.
Won’t Offer a Wide Range of Payment Options
Most firms allow consumers to choose their preferred payment method. You might pay through the website, using your debit card, or over the phone. A con artist, however, will provide limited options, preferring to stick to those that are untraceable.
Warns You That They’ll Have You Arrested
In most instances, this is a bluff to frighten you. Unpaid debt is seldom a reason for imprisonment. Times when you have to pay fines and restitution are the exception.
They Say They’ll Tell People You Know About the Situation
This is a sure sign of a scam. Debt collectors are obligated by law to protect your privacy. They may call people to find out how to contact you, but they can’t share the details. Exceptions to this rule are where you’ve permitted them to share information or they have a garnishment.
You Don’t Remember the Debt
This is another red flag. Some con artists glean details from your social media pages about where you shop. They’ll then call pretending to represent the company concerned. Where the situation may become complicated is when an identity thief used your details to open an account.
Either way, it’s worth checking that they are who they say they are.
Wants Your Social Security Number or Banking Details
Legitimate companies should have your Social Security number on hand. Tell them that they must read out the number, and you’ll confirm if it’s correct or not.
Harasses You Whenever They Like
Legally, collection agencies may only call you between eight in the morning and nine in the evening. Con artists don’t restrict themselves to general office hours. They choose the most inopportune time to call so that they can put you on the spot.
What Can You Do If the Debt Collection Agency Is Real?
Never admit to owing the money outright, especially if it’s an old account. See first if it’s prescribed. This may be the case if:
- The company didn’t contact you about recovering the money in the last three years
- You’ve not admitted to owing the amount within the last three years
- The creditor didn’t take legal action
- You didn’t make any payments over the last three years
You may then dispute the debt on the basis that it’s prescribed. The firm must then prove that you knew about or agreed to pay the money.
How the debt collector treats you is governed by the Fair Debt Collection Practices Act. This act states that the debt collector:
- May not make false claims, such as saying they’re a lawyer
- They must not lie about the amount or other aspects of the debt
- Must call between 8:00 am and 9:00 pm
- May not discuss your situation with colleagues or friends
- Is not allowed to use obscene language
- May not threaten physical violence or try to gain entry to your home illegally
What Can You Do If the Debt Collection Agency Is Fake?
If you’ve established that the caller is from a fake agency, report the incident to the Federal Trade Commission or your state attorney general. They’ll launch an investigation and try to find out who is behind the incident.
From there, it’s best to avoid entertaining any further calls from the so-called agency. Block their phone number and ignore any calls from numbers you don’t know. When they realize that you won’t play phone tag with them, they’ll move on to a softer target.
Final Notes
Debt collectors have been known to use some unethical methods to extract payments. Scammers use these techniques and many others to pressure you into parting with your money. Always stand your ground, even if you think that they’re legitimate. If the debt collector is real, you have actions that you can take to settle the debt.
They are obliged to give you information and some time to check it out. Always confirm the legitimacy of the agency with the company that issued the credit initially. It’s one of the best ways to sniff out a scam.
