Dealing with debt is a worrying experience. Money problems are the leading stressor for Americans, causing all sorts of problems from headaches to heartburn. Our debt makes us feel weak and helpless. Making things even worse, some people even prey on that vulnerability that we feel.
Debt collection scams lead victims to believe that they owe money to someone. Using high-pressure tactics and fear mongering, the scammer squeezes money out of their victim before disappearing. The money doesn’t go towards any debt but ends up in the scammers’ pockets.
These debt collection scams (also known as phantom debt or zombie debt) have been going on for years now and the number of reported incidents is on the rise. Here’s how to protect yourself from these predators.
The Scam in Action
Imagine you’re at home — or even at work — when you start receiving call after call saying you owe money to an agency that you’ve never heard of. The person on the other end of the line rattles off an alarming amount of personal information (like the last four digits of your Social Security number) and says that you owe a certain amount of money. These phantom debts can total hundreds or thousands of dollars per victim, depending on the ambitions of the scammer.
If you don’t pay, they threaten you with jail time or the loss of your future wages. If you hang up, they keep on calling. Sometimes the calls happen dozens of times per week.
These high-pressure calls can be relentless, and the fact that they have some of your personal information adds a sense of legitimacy. The unpleasant caller demands that you wire the money as soon as possible or they’ll involve the authorities. It’s no wonder that many people fall for this act and that it remains a lucrative scam.
Real or a Scam?
One of the reasons the scam is successful is because some legitimate debt collection companies behave in a similar way. If you owe a debt from years ago that you haven’t paid, there’s a chance that the original debtor sold it to a third party that you’re not familiar with.
Telling the difference between a legitimate debt collector and a scammer can be difficult, as the real debt collectors often behave in unprofessional and aggressive ways. You can try some techniques to see if the caller is the real deal. The Consumer Financial Protection Bureau offers these tips:
- Ask the caller for their name, company, address and phone number. Also, ask for their professional license number. If they don’t fulfill your request, you can be fairly certain that they’re scammers.
- You’re not legally entitled to discuss any debt unless you receive a written validation notice. Don’t give the caller any personal information, but ask to be mailed this notice.
If you’re the subject of a scam, you can take certain measures to help prevent it from happening to other people.
Gather all the information you can about the scammer and file a complaint with the Federal Trade Commission. Scammers are good at hiding their identities and locations, but reporting the scam to the authorities can help. It’s also wise to file a complaint with your state’s attorney general so they’re aware of the number of scams happening. These complaints can typically be filed online.
The bad news is that if you’ve fallen victim to this scam, there’s little recourse to take. That’s why it’s important to take precautions: Make sure to ask for the key information that will prove whether the caller is legitimate.