How To Tell If Your Debt Collector Is A Fraud

Written by Lisa Rennie
Fact-checked by Caitlin Wood
Last Updated January 9, 2023

If you’ve been struggling to keep up with your loan payments, your lender may sell your debt to a collection agency. While some calls may be from a real debt collector, others may be from a scammer posing as a debt collector. 

So if you ever receive calls from a debt collector, whether you know you have debt or not, do yourself a favour and investigate before you pay.

How To Tell If Your Debt Collector Is A Fraud

If you’re overdue on your debt, your creditor may reach out to you and try to collect your missed payments. However, if they’re unsuccessful, they may enlist the services of a debt collector to collect the money you owe.

Unfortunately, many Canadians have been victimized by scammers who convince consumers that they are legitimate collection agencies collecting overdue funds on behalf of creditors.

To protect yourself against these fraudsters, consider the following red flags:

1. There’s No Proof 

Always ask for a debt collector to provide you with written proof that they are in fact legitimate as they are required to if you ask. If your debt collector refuses or tries to avoid this topic then you would be correct to assume that they are trying to scam you. Do not believe them if they tell you that they have already sent you a letter of proof in the mail and that you should be receiving it soon or that they will email you proof.

Makes sure that you have a confirmation letter in your hands before you even think about paying the debt collector and if for some reason it hasn’t arrived then there is no reason you shouldn’t ask for a second one to be sent to you.

How To Verify A Debt Collection Agency 

Legitimate collection agencies can be easily verified by checking with the Better Business Bureau (BBB) or the consumer affairs office in your province or territory. They should be transparent about their company name, contact information, location, and website address. 

Once you find this information, call the agency and make sure they did indeed try to reach you to collect on unpaid debt

If you can’t find the company with your local government office or the BBB, chances are you’re dealing with a fraudster. 

2. They’re Threatening You

While collection agencies are allowed to make every effort to call you, they cannot go so far as to harass you in the process. More specifically, these agencies cannot use language that is considered to be threatening, intimidating, or abusive in any way. They’re also not allowed to put undue pressure on you or make any threats to get you to pay. 

Can A Debt Collector Sue You? 

Yes, a collection agency can take you to court to collect a debt you still owe. However, this typically happens with debt that is at least 6 months past due. If they decide to sue you, you’ll be served with papers.

Creditors can also sue you if they wish, though this seldom happens because it’s an expensive process. They may be more likely to take you to court if the debt is high enough to justify this step. 

Collection agencies and creditors must adhere to the statutes of limitation applicable in the respective province or territory. In other words, they cannot take you to court if your debt is too old. 

3. They Don’t Have Information About Your Debt

A legitimate collection agency will have all the details about your overdue debt, including the type of debt, who the creditor is, how much the debt is, when you started falling behind on your payments, and what the interest rate is, among others. If the debt collector is not able to provide you with any of these details, it’s most likely a scam.

4. They Demand To Be Paid Via A Prepaid Card Or Wire Transfer

Legitimate debt collectors will never ask to be paid with a prepaid card or through a wire transfer. If you’re asked to do this, it’s a sign that you’re being scammed. 

Similarly, fake debt collectors will demand money right away because they don’t want to give you a chance to figure out that you are being scammed. Never pay a debt collector the same day they call you, a real debt collector will at least give you a few days to get your affairs in order.

5. They Don’t Abide By The Rules

There are specific rules that debt collectors must comply with when collecting an overdue debt, such as the following:

  • They can’t use unethical pressure tactics or threatening language
  • They can’t call you on holidays, Sundays between 1 pm to 5 pm, and any other day before 7 am or after 9 pm
  • They can’t give you inaccurate or misleading information
  • They can’t call your family unless it’s to get your phone number
  • They can’t call your employer unless it’s to confirm your employment
  • They can’t call you at work (some exceptions may apply)

So, if a collection agency tries to scare you with imprisonment, threatens to call your friends and family, or calls you at all hours of the night, they’re breaking the rules. 

Common Debt Collector Scams

Fraudulent collection agencies are savvy and use several tactics to scam unsuspecting Canadians out of their money. They sound legitimate, which is why many Canadians fall victim to these scams.   

Here are a few debt collector scams to keep an eye out for:

Collection Agency Scams 

In this scam, the person pretends to work with Equifax or TransUnion and informs you that they’ve been sent by one of your creditors to collect an overdue debt.

The credit bureaus in Canada do not directly collect debt payments. So, if anyone claims to be from one of these bureaus and demands that you repay what you owe, do not provide them with any information and hang up.

CRA Tax Debt Collection Scams

In this scam, the person pretends to work for the Canada Revenue Agency (CRA) and says that you owe taxes and that you must repay them immediately. In many cases, these scammers may use threatening language and claim that you could be arrested and thrown in jail for failure to pay.

The real CRA won’t ask for any credit or debit card information over the phone, nor will they use intimidating language or threaten to call the police. Do not give any personal information over the phone, and hang up. If you think you may have overdue tax debt, call the CRA directly to check your tax account and verify that the CRA actually did call you.

What To Do If You Know You’re Being Scammed By A Debt Collector

If you receive a call from a debt collector and decide that you are being scammed, it’s important to stay calm and follow these steps.

Ask Them To Identify Themselves

Calmly ask who they are and what company they are working for and then make an excuse and hang up right away. Your scammer will probably give you a legitimate name but now you need to figure out if they are actually the person they said they were. 

Look Up The Name And Company They Gave You

Do some research online and try to find more information about who the debt collector is pretending to be. If they are impersonating a legitimate company or debt collector, you should be able to verify the real identity of the name they gave. 

Call the agency they said they worked for and ask questions, it’s your money so do what you need to do.

Report The Scammer To The Canadian Anti-Fraud Centre

Once you verify that the debtor who contacted you is in fact a scammer, it’s important to report them to the Canadian Anti-Fraud Centre. You can do this online or over the phone. By reporting fraud you may help prevent other consumers from being scammed in the future.

  • Website: https://www.antifraudcentre-centreantifraude.ca/
  • Phone number: 1-888-495-8501

How To Report A Fake Debt Collector

If you believe you’ve been targeted by a fraudulent debt collector, you should consider reporting the incident, both to protect yourself and other consumers. Here are a few ways to report a fake debt collector:

  • File a report to the Canadian Anti-Fraud Centre to provide information that can be used to fight scam and spam callers.
  • File a complaint with the Financial Consumer Agency of Canada (FCAC), which deals with complaints about collection agencies hired by a federally-regulated financial institution.
  • File a complaint with your provincial or territorial consumer affairs office about the collection agency’s collection practices. 
  • File a complaint with the BBB, which strives to protect consumers against unethical business practices.

Debt Collection Scam FAQs

How do I know if my debt has been sent to a debt collector?

You will receive a written notice before a debt collector contacts you to collect the outstanding debt. The notice will include the collection agency’s name, the name of the creditor you owe, and the amount you owe.

How do I deal with a fake debt collector?

It’s important to get familiar with the signs of a fraudulent debt collector so you can avoid giving them personal information. If you’re contacted by one, do not provide them with any information. Try to get their name and report them. 

Can I ignore a debt collector?

Collection agencies can be persistent, despite your efforts to ignore their calls. While it’s possible that they may give up after a while, there’s a bigger chance that they won’t. Even if they do, more aggressive steps may be taken to collect your outstanding debt, including a summons to appear in court. It’s best that you speak with the collection agency and deal with your debt to avoid any significant repercussions. You may even be able to negotiate with them to lower the amount you owe or give you more time to pay it back.

Can a debt collector call my boss?

The collection agency can call your employer, but only for the purposes of getting your telephone number and address or to confirm your employment. However, they are not allowed to discuss your debt with your boss. And once they get the information they need, they can’t call your employer anymore.   However, there are exceptions. For instance, the debt collector may be allowed to discuss your debt with your boss if the person being contacted is a co-signer on your loan. 

Bottom Line

Just remember the two most important things you can do are stay calm and do not under any circumstances hand over any money. Do some research and verify all the information you have. Making sure if it’s a scam or a legitimate debt collector before you make any payments is extremely important.


Rating of 4/5 based on 68 votes.

Lisa has been working as a personal finance writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same.

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