How to Tell Whether a Caller Is a Legitimate Collection Agency or a Scam

If you’ve been called about a debt you didn’t recognize, you may have been the victim of a collections scam. Fraudsters often prey upon people’s fear of collection agencies to try to steal money and information. The scammer calls, pretending to be a collections agent, and tries to scare you into giving them the information or money they want. 

These scams are easy to spot if you know what to look for. Legitimate collection agencies must follow strict rules when attempting to collect a debt. Any caller that fails to follow these rules should make you suspicious. Here’s what you need to know about the most common collection scam tactics, the rules for real agencies, and how to get fake collection calls to stop for good. 

Common Collections Scams and Tactics

Scammers do what they do for one reason: they want to take financial advantage of you. All collection agency scams boil down to that single purpose. Depending on the scammer, they can attempt to do this in one of two ways:

Steal Money From You Directly

This is the simplest path for fraudsters. They contact you claiming that you owe a debt and need to pay it immediately. They often use high-pressure tactics like claiming you could be sent to jail or sued if you don’t immediately pay. They may also threaten to tell other people about your debt or claim they can repossess your home or car. They usually tell you to pay them immediately through cash transfers, gift cards, or other untraceable methods, then disappear with the funds.

Acquire and Sell Your Information

Some scammers don’t bother trying to convince you to send them money directly. Instead, they play the long game and try to make you tell them your sensitive financial information, such as your Social Security Number, bank account details, or credit card information. 

These scammers may use the same high-pressure tactics as above or present themselves as professionals who just need some information to “sort out” a fake debt. They can use this information to drain your accounts, put charges on your card, or steal your identity. They can also sell it to other people to make even more money. 

In general, if someone calls you and demands immediate payment or sensitive information, you should be wary. Always double-check to make sure any collections agent who calls you is legitimate before giving them any money or details about yourself.

What Do Collection agencies Need to Tell You?

The federal Fair Debt Collection Practices Act (FDCPA) requires all debt collectors to follow strict guidelines to help prevent these scams and protect consumers like you. Legitimate collection agencies must do the following:

• Identify themselves: The agent must always tell you who they are, who they represent, and why they’re contacting you in every form of communication, including letters, phone calls, and texts. 
• Verify the original debt holder: Collections agents must identify the full name and address of the original holder of the debt about which they are calling if you ask. For example, if they call about a medical debt, they must tell you the name and location of the hospital where it was incurred.
• Explain the debt: The agent needs to tell you the exact amount of the original debt, as well as any additional charges or interest fees that have been added to it since. 
• Inform you about your rights: Most importantly, collections agents must always tell you about your right to dispute debts.

In addition, you have the right to request a written validation notice of the debt. If you make this request, the collection agency must send you the validation notice and cannot contact you again until you’ve received it. This validation letter will include all the information above, allowing you to verify it’s correct and dispute any inaccuracies. 

Signs That a Call May Be a Collections Scam

If you’re not sure whether the collections agent calling you is legitimate, there are a few signs you can watch for. Genuine collection agencies should never do any of the following:

• Refuse to give you their information. Collections agents are supposed to identify themselves and their agency unprompted. If they don’t do so, and if they refuse to provide you with that information upon request, they are either trying to scam you or violating the FDCPA.
• Threaten you. Critically, no collections agent may ever threaten you with physical harm or arrest. They may not threaten you with legal action, such as a lawsuit or foreclosure, unless they intend to follow through, either. Once again, the caller is breaking the law one way or another, and you should not do what they demand. 
• Demand sensitive financial information. A collection agency should never ask for your sensitive financial information over the phone. If they request your bank or credit card details, do not provide them. 
• Pressure you to pay by money transfer or prepaid cards. Similarly, legitimate credit agencies will not ask you to pay through untraceable methods like gift cards or wire transfers. This is an immediate red flag that the call is a scam. 

How to Make Collections Calls Stop

If a supposed collection agency attempts any of the above, the caller is either scamming you or violating your rights as a consumer. Hang up the phone and call an experienced consumer protection attorney like the team at The Law Offices of Todd M. Friedman, P.C. We will explain your rights under the FDCPA and help you fight back against scam callers and unethical collection agencies. You can schedule your consultation and learn how we can help you fight back against scam calls by calling 323-973-2605 or reaching out online today.