How to Tell If You're Talking to a Fake Debt Collector

Debt scares people. Losing money is pretty terrifying, too, so getting a call from a debt collector and paying what he says you owe, only to find out you’ve been scammed out of your money, is pretty much a nightmare.

It happens all the time. Debt collection scams are successful because the people impersonating collectors tend to make outrageous claims that intimidate consumers enough to get them to pay up — scammers threaten victims with arrest, jail time, lawsuits and telling friends or your employer about the debt. You can make it all go away by paying immediately, they’ll say.

And a lot of people do hand over the money, especially if they already know the consequences of an unpaid debt. A collection account will hurt your credit score significantly and can remain on your credit report for years. You can check your credit scores for free on Credit.com and see if a collection account is impacting your scores.

Before you hand over the money, investigate the situation. Even if the debt is real, there’s no reason you should have to pay immediately, so stay calm, and take some time to find out if the caller is a real or fake debt collector.

1. He Won’t Give You Proof

Debt collectors have to provide you written confirmation of the debt they’re collecting if you ask for it. If the collector tries to dodge this requirement, you have a good reason to think you’re being scammed. The collector may try to maneuver around the problem, saying the confirmation letter has already been sent or he can send you one in an email, but that’s not the answer you want, either.

Even if the debt is legitimate and you’re told the confirmation has already been sent, there’s no harm in asking for a second letter, said Gerri Detweiler, Credit.com’s director of consumer education. You’re entitled to that written confirmation, so make sure you get it. Here are nine other rights you should know you have when dealing with debt collectors.

2. She’s Threatening You

Debt collectors aren’t allowed to threaten you — it’s prohibited under the Fair Debt Collection Practices Act.

“The biggest tipoff is they’re threatening some kind of severe action if you don’t pay immediately,” Detweiler said. “Whether they’re threatening to sue you, have you arrested for fraud, have you subpoenaed, any of those things, those are typically false threats.”

If you’re going to get sued for a debt, you’ll be served with papers. You won’t get a call demanding payment, “or else … .”

Legitimate debt collectors have been known to bully consumers with illegal tactics, but even in the case of a real debt, you shouldn’t be subjected to such treatment. Ask what firm they’re working for, look up the contact information on your own and call back so you can deal with someone else. If the abusive behavior continues, report it to the Consumer Financial Protection Bureau.

3. He Wants a Wire Transfer or Prepaid Card

The point of these scams is to steal consumers’ money. He may tell you to send money through Western Union or load it onto a prepaid debit card and give him the card number. That’s not how debt is collected, and if you fall for this scheme, you’re probably never getting your money back.

4. She’s Calling About a Payday Loan

Not all collection calls about payday loans are fake, but it’s a common practice among scammers to buy (or steal) payday loan information and use it to target borrowers.

“It sounds really legit because they know all this information,” Detweiler said, “but payday loan debt collectors have to follow the Fair Debt Collection Practices Act just like any other third-party debt collector.

That means no threats of legal action or divulging your debt to others. It’s important to know your rights when dealing with debt collectors, so even if the debt is real, you know how to go through the process as a confident, informed consumer.

What to Do If You Think You’re Getting Scammed

Find out who they’re working for (or claim to be working for), then hang up. The fraudster may have been impersonating anyone from law enforcement to a legitimate collection agency, but no matter who he says he is, if it’s a legitimate debt, you should be able to confirm that independently.

“There’s absolutely nothing wrong with hanging up and calling that firm directly,” Detweiler said. “The best thing you can do is try to stay calm not to pay anything to a firm you’re not sure about and to investigate further.”