How to Identify a Debt Collection Scam

Debt can be unpleasant even if you’re making your payments in a timely manner without much trouble. It can become especially unpleasant if something interrupts your capacity to repay, because it doesn’t take long for the calls from debt collectors to start. Even if they’re courteous and helpful, being reminded that you owe money is seldom fun.

However, debt collectors are a reality, and they serve an important purpose. They are also required to play by certain rules, on both the federal and state level. Most states require a license. And there are a LOT of fraudulent debt collectors, who either use personal information gleaned from data breaches and other sources, or who simply make cold calls to random people, in hopes of frightening someone into sending a payment or two.

How can you tell the difference?

First, know what you owe. Go to three times per year and download your credit report from one of the three major bureaus (Experian, Equifax, Transunion)—they should all have the same information, so it doesn’t matter which one you choose when. Use these to check for errors, but also use them to keep abreast of your actual debts. That way, if someone calls with a claim that you owe an unpaid amount, you will know whether or not they’re telling the truth.

Fraudulent debt collectors almost always use fear to motivate victims into paying up. One way is by threatening the victim with arrest, sometimes by claiming to represent some arm of the criminal justice system. Remember that local, county or state police officers do not make phone calls on behalf of lenders seeking to recoup an unpaid loss. Nor do FBI, CIA, ATF, DEA or Homeland Security agents, or judges at any level of government. As soon as the caller claims to be one of these, or tells you that the cops are on their way to your house, hang up and move on with your life—it was a scam.

Some of those rules I mentioned earlier have to do with how a debt collector is allowed to address you over the phone. A legitimate debt collector is not allowed to threaten or harass you in any way, and they nor to use abusive or profane language. They’re not allowed to call before 8 in the morning or after 9 in the evening, and if you ask them not to call again, they’re required to stop. (That doesn’t mean the debt is gone, though…you’re basically saying, “I know I owe this amount, but you calling every day isn’t causing money to magically appear.”)

Any violation of these is a sign that something isn’t quite right, and of course if you know you don’t have any outstanding debts, or are aware of exactly how much you owe and to whom, it’s easy to spot the deception when someone calls out of the blue.