March 22, 2016

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Watch Out for Debt Collection Scams

When it comes to fraud and potential identity theft, debt collection scams are among the most popular. How can you avoid becoming a victim?

Sometimes, you may receive a call about debt collection due to recent actions you’ve taken. For example, the National Consumers League reports that people who apply for payday loans or short-term credit online are the most targeted by debt collection scams. But anyone can receive these types of calls, especially if the scammer already knows a bit about you.

Not only can this lead to financial fraud, in which a scammer cons you out of money, but also puts you at risk of identity theft. By getting you to reveal even more personal information about yourself on a call, like your Social Security number, the “debt collector” can use that information to impersonate you or sell your identity to others.

To distinguish between a legitimate collection agency and a debt collection scam, it helps to know the rules that collection agencies are supposed to follow. If your caller isn’t sticking to these, you may be talking to a scammer:

  • The caller should be able to give you his or her full name, agency address, original creditor account number and website URL. If a caller isn’t fraudulent, you should be able to look up the agency online and call back; but even then, be suspicious until you’ve done more research.
  • Legitimate agencies send paperwork through the mail first and then do a follow-up call. If you haven’t received any printed notices, ask the caller to send another one instead of handling the debt over the phone. Don’t give out your address, since a real collection agency would already have it.
  • If the amount demanded is significantly more than the debt you owe, it’s probably a debt collection scam. Although fees or interest may be involved, the total should still be close to your original debt.
  • Debt collectors can call about personal, family and household debts, including money you owe on a credit card, mortgage, medical bill or auto loan. But they cannot call about any debts incurred as part of running a business.
  • You can’t be contacted at work if you tell a collector you’re not allowed to get calls there. Collectors are also prohibited from calling before 8 a.m. or after 9 p.m.
  • It’s illegal for a debt collector to impersonate someone else, such as an attorney or government official. Some debt collection scams involve the caller pretending to be law enforcement and threatening immediate arrest over an unpaid debt. If you’re getting a call from police, it’s a scam. You also wouldn’t receive calls from the IRS unless mailed notices arrived first.
  • Numerous practices are off-limits for debt collectors, including using obscene language, claiming you’ve committed a crime, contacting family members other than a spouse and using a fake company name. They also can’t claim they’ll take your property or garnish your wages, unless they’ve started legal proceedings that would allow them to do so. In that case, you would have received written notice of that action.

The fact is, many people get behind on their bills, prompting debt collection action. While the process may be unpleasant, it should never be filled with aggression or fear.

Protect yourself from debt collection scams (and from legitimate collectors skirting the laws) by remembering your rights. Also, consider identity theft protection services that can monitor your information and help you react if a debt collection scam turns into an identity theft incident.

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Heidi Daitch

Director, Strategic Programs at IdentityForce
Heidi is a busy working mom who juggles many of the same responsibilities and challenges at home and at work - a long list of things to do and not enough time to do everything. With so little time, Heidi tries hard to find simple, but effective strategies to save time for what’s really important – spending time with her family.
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