Real third-party debt collectors are bad enough.
But if you’re in debt, you’ve got another shark in the waters. Scammers who want to take advantage of your financial chaos.
And since the last thing you need to do when you’re in financial trouble is throw good money after bad, we thought it would be a good idea to help you spot these scams so you don’t lose a dime more than you need to.
1. The call is about payday loan debt you don’t remember taking out.
If you take out payday loans and there’s a record of that somewhere, you’re easy meat. Few people who take out these loans remember exactly where they took them out, or how much, or even when. And, of course, taking out a payday loan is a good sign you’re in over your head financially.
And if you applied for the loan on the Internet you’re twice as vulnerable, as there’s a good chance you’ve sent a mountain of information about yourself on to the Dark Web, where it’s being sold and resold by criminal elements.
The scammer will often use a name very close to real Payday loan companies. They might say they’re with American Advance, for example, to make you think they’re with Advance America.
This isn’t to say every debt collector who calls you about a payday loan is automatically scamming you, but it should be a big red flag.
2. The caller threatens you by saying they intend to file a fraud charge against you.
One reason payday loans are so attractive to scammers is because they can make a convincing case that you’ve committed a crime.
They can say oh, your post-dated check never cleared, if you don’t pay this debt we’re going to file charges against you for passing bad checks. Or, if you got the money via wire transfer, they might accuse you of wire transfer fraud.
Real debt collectors don’t work that way. Threatening to get you thrown in jail over a debt is a violation of the Fair Debt Collections Practices Act. And a debt collector couldn’t file charges anyway. They would have to report you to the District Attorney, and the DA would decide whether or not to do that.
And a real debt collector is much more likely to try to sue you for the debt than they are to try and convince a district attorney you’ve committed some form of fraud. Which would have to be an intentional act, rather than a financial problem. That is much harder to prove than these guys would have you believe.
And if they’re legitimately using bad check laws to go after you for a real debt (it has happened), you’ll get a letter from the DA, not a call from a shady number.
3. They won’t give you their name, address, or company name.
All legitimate debt collectors will do this for the asking.
Be sure to Google the name, address, and phone number on your caller ID. Make sure they match what you were told. If not, someone may be pretending to be a real debt collection company in order to forward their scam.
4. You ask for a debt validation letter, and never receive one.
If you ask for a debt validation letter debt collectors are required to send one. And usually they’re all-too-happy to do so, as they nearly always say, “we verified this debt and it’s yours.”
If you never get one at all? You were talking to a scammer, and they’ve already moved on to their next victims.
5. They are missing key bits of information about you and your debt.
Any debt collector should be able to accurately repeat your name and address. If they give you an address you’ve never lived at, or say they don’t have that information, they’re either a scammer or someone who bought a giant spreadsheet with incomplete information.
Either way, you’re under no obligation to either speak to them or pay them.
See also: Are You Dealing With Zombie Debt?
6. They ask you to wire money.
Don’t wire money to anyone. Ever. Unless it’s a member of your family in response to some emergency. There’s no record of the transaction and there’s no reversing it if you find out you’ve made a mistake.
If you’re going to pay over the phone, use a debit card or a credit card. And don’t do it unless you’re very sure.
See also: How to Deal with Collection Calls.
7. They say they’re from the government.
The IRS sends letters.
Other government agencies do not get involved in debt collection. This is absolutely nothing more than an attempt to intimidate you into paying fast.
8. You can’t find them when you Google them.
The quickest way to figure out who you’re dealing with is to Google the phone number. If it’s a scam you won’t be able to link it to any real business, but you will probably see a bunch of other complaints about the number. If it’s a real business a name and address are likely to pop up, as is a website.
Should you even be paying a debt collector at all?
If you’re in dire financial straits, paying debt collectors, even legitimate debt collectors, may be the worst move you can make. You’re spending money you don’t have to spend to do something that no longer benefits you in any way.
Instead, consider filing for bankruptcy, the legal way to put an end to all threats, both legitimate and illegitimate. Then, when anyone calls, you can just give them the name and number of your attorney and tell them to leave you alone.
If it’s a scammer, we’ll never hear from them.