How to Tell if Your Debt Collector is a Fraud

How to Tell if Your Debt Collector is a Fraud

Written by Caitlin Wood
Last Updated June 2, 2021

Debt is a scary thing. Losing money on accident or for no reason is also scary if not terrifying. So when you get “the call” from a debt collector who informs you that you owe them quite a bit of money and you take them very seriously and pay it right away, finding out later that you’ve been scammed is basically a nightmare.

Unfortunately this situation plays out all the time. This type of debt collection scam works because most people do not want to be in debt especially to a collections agency. The scammers are able to impersonate legitimate debt collectors and then use threats, insults, abuse, pressure and extreme claims to bully average people just like you into giving them money. The worst part is that they will probably try to contact, or at least threaten to contact, your friends and family as well as your boss or coworkers. And the only way they’ll leave you alone is if you pay them the amount they want.

The reason this scams still exists is because it works. Most people will pay off the debt they are told they have, especially if they have had debt in the past that has negativity affected they’re lives. A collections account will leave a huge black mark on your credit report for a long time and can even prevent you from getting new credit when you need it.

So if you ever receive calls from a debt collector, whether you know you have debt or not, do yourself a favor and investigate before you pay. Even if the whole situation turns out to be legitimate it’s better to be safe than sorry.

Here are a few ways you can tell if you’re talking to a fake debt collector.

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.

2. They’re Threatening You

Real debt collectors are prohibited, by law, from threatening you. So if your debt collector is continually threatening you with serious actions then it’s safe to say that it is probably a scam. Real debt collectors absolutely want to be paid right away but they will not threaten to sue you or get you arrested if you don’t pay them right that moment. Furthermore, if you’re ever to actually be sued you will be served with papers and not threatened over the telephone.

Real debt collectors are not always the nicest of people and they will sometimes try to intimidate you but if it gets out of hand ask what agency they work for and then call back so you can speak with another collector. Obviously if they refuse to tell you this information then you should take it as another sign that you are in fact being scammed.

3. They Demand to be Paid via a Prepaid Card or Wire Transfer

Legitimate debt collectors never ask to be paid with a prepaid card or through a wire transfer so if you’re asked to do this you are definitely being scammed. Fake debt collectors want to steal your money and they will do anything to get it right away, before you can 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.

Go here for more information on this type of scam.

4. If They have Information about your Payday Loan

This is specific to those who have a payday loan. If a debt collector calls you and has information about you and any payday loans you might have then it’s possible that you are being scammed. Scammers target payday loan companies and either buy or steal their client information.

Your debt collector will sound legitimate because they have lots of information about you but don’t fall for their lies, if they aren’t actually calling about a payday loan but still have information about it then they are trying to scam you. Make sure you are educated and know your rights when deal thing debt collectors (and payday loans) that way you’ll be able to defend yourself against a scam.

What you Should do if you know you’re being Scammed

If you receive a call from a debt collector and decide that you are being scammed do not freak out and start yelling, 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. Do some research online and find out what’s going on, whoever your scammer is pretending to be, you’ll 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.

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 62 votes.

Caitlin is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security. One of the main ways she’s built good financial habits is by budgeting and tracking her spending through the YNAB budgeting app. She also automates her savings so she never forgets to put aside a portion of her income into her TFSA. She believes investing and passive income is key to earning financial freedom. She also uses her Aeroplan TD credit card to collect Aeroplan points so that she can save money when she travels.

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