Beware! Phony Debt Collection Scam

By Gerri Detweiler. Updated December 2, 2020.

Phony debt collectors are harassing consumers, and threatening them over debts they don’t even owe in a national scam, warns the Better Business Bureau. The BBB issued a national alert after receiving numerous complaints from consumers across the country about phony debt collectors who tell consumers that they have defaulted on a payday loan and face immediate arrest if they don’t pay the debt. Although this alert was released years ago, debt collection scams continue.

People have lost significant money to these scammers. That's money they could have paid to legitimate debt collectors or to pay essential bills. Don't let it happen to you!

The collectors often claim to be attorneys and have an unusual amount of personal information about their potential victims, leading the BBB to believe a data breach may be the source of their information.

The fake debt collectors tell their targeted victims that they owe money for a payday loan, and that if they don’t pay the debt right away they will be arrested immediately. The scammers often have heavy foreign accents and detailed information about their potential victims, including their Social Security numbers, old bank account numbers, or driver’s license numbers, as well as their home addresses, employer information and even the names of personal friends and professional references. This information makes the scam far more frightening than the usual phishing scam.

The BBB offers the following advice to consumers if they receive a suspicious telephone call about an outstanding debt. The following is good advice anytime you hear from the debt collector for the first time.

• Ask the debt collector to provide written documentation to substantiate the debt. By law, the collector must send you written notification of your debt! If a debt collector refuses to send it, you may be dealing with a scammer.
• Do not provide or confirm any bank account, credit card number or other financial or personal information over the phone until you have confirmed the legitimacy of the caller.
  
• File a complaint with the Federal Trade Commission online if the caller is abusive, uses threats or otherwise violates federal telemarketing laws. File a complain with your state attorney general's as well.
  

Our advice (as the authors of Debt Collection Answers) is that you also download our free debt collection worksheet and keep good notes of any conversation you may have with one of these so-called debt collectors. Also, consider placing a fraud alert or credit freeze on your credit files, and file a complaint with your state attorney general’s office as well as the FTC.

Do not be intimidated by these debt collection scam! Their threats are bogus.

Read our e-book, Debt Collection Answers, here for free!