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5 Signs a Debt Collection is a Scam

“Debt collection” and “scam” are often used in the same sentence unfairly. In truth, people get behind on their bills sometimes, and someone has to call and help people figure out a payment plan.

Unfortunately, it’s an area rife with scams. How do you know if the person calling you about an old bill you’d forgotten is legitimate or trying to steal your credit card number? Residents often see an increase in scams right after major events such as the recent hurricanes here in North Carolina. Many times those scams are asking for donations to help storm victims. Whether you’re hearing about a past due bill or a request for help, here are some signs it’s a scam:

  1. The caller threatens you with jail time. Whether they work directly for the company to whom you owe money or for a third-party collector, the person calling is NOT allowed to threaten you in any way. If he or she mentions jail, prison, an arrest warrant, or something along those lines, it is a scam.
  2. The caller claims to be from the IRS. As the IRS says on its website, “The IRS doesn’t initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information.” Furthermore, watch out if they direct you to IRS.gov to verify that it really is them. Some scammers are using numbers similar to those used by IRS Taxpayer Assistance Centers. (Read more about IRS Tax Scams.)
  3. They won’t answer your questions. If you owe a company money, the caller should be able to answer questions about the debt, the company, and more as well as fully explain who they are. In the U.S. you also have the right to receive notice by mail to confirm a debt you owe, so ask. If they refuse to do so, it’s not the real deal. If you don’t remember a debt, the caller might be making it up. Of course, it’s also possible you forgot, but in that case, it’s OK to hang up and verify it.
  4. They ask for personal information such as account numbers, Social Security number, or other details. While a legitimate debt collector may ask you about payment, they will verify the information they already have on file for you. Genuine collection agencies should share with you details about your account; such as the name of the original creditor, date of service or delinquency and where you can mail your payment if you don’t want to make it over the phone.
  5. They pressure you to make a decision immediately. Scammers race against time; the longer they run a scam, the higher their chances of getting caught or shutting it down before they get caught. Their goal is to get money from you during that first call if possible. A true debt collector or even a good salesperson will give you time to consider your options and not pressure you.

Tips for Managing Potential Scam Calls

  • Don’t call an unknown number back if the caller didn’t leave a voicemail.
  • Don’t confirm account information; some scammers will get you to say “OK” to claim you approved a charge.
  • Telemarketers must tell you who they are and why they are calling right up front. Hang up if someone doesn’t do this. They must also call between 8 a.m. and 9 p.m. If it’s earlier or later, hang up or ignore the call.
  • Anything that’s “free” but requires you to pay something is a scam.
  • Get more tips for handling calls from the FTC.

Tips to Confirm Your Debt

Business owners must contact consumers somehow to get payment, so you may occasionally get a call about debt. Confirm your debt by checking your credit report online. There, you should be able to see outstanding items you owe if the delinquency has been placed on your credit report.

Never be afraid to ask more and more questions if you feel as though you are potentially being scammed. You have the right and responsibility to request validation of your debt from the original creditor, requesting that validation will confirm or deny your suspicions about the agency calling you. The Better Business Bureau is an excellent resource for confirming the validity of a business if you still are wary.