Don’t Let Fake Debt Collectors Scam You Out of Money You Don’t Owe

Scammers love to pose as debt collectors and make threatening phone calls demanding payment for debts that never even existed. Don’t let them fool you!

Almost exactly one year ago, the Federal Trade Commission (FTC) busted a group of fake debt collectors that had been calling people and demanding payment on debts these people didn’t owe. Posing as lawyers, members of this group would threaten lawsuits and jail-time if these “debts” weren’t paid back immediately.

It would be great if we could tell you that those actions by the FTC put a stop to fake debt collectors scams once and for all, but we both know that isn’t true. Like the many-headed Hydra from Greek mythology, cutting down one debt collection scam only means that two others will rise to take its place.

If you’ve ever applied for a personal loan—especially if it was an online loan—then there is a chance your information could be used against you by scammers posing as scary debt collectors. Here’s how the scam works, and what you can do in order to keep yourself safe.


Records of your loan applications can end up in the wrong hands. 

In ye olden days, anyone who wanted to get a loan had to stop by a bank in person. Even folks who wanted a payday loan had to visit their local storefront. But now, in an age where you can order pretty much anything under the sun with a tap of your smartphone, all it takes to apply for a loan is to visit a lender’s website.

Here’s where things get tricky. Many websites that you visit to get a loan aren’t actually lenders at all. They’re not anything frightening—don’t worry. They’re just lead generators. Once you submit your information and hit apply, they send out your info to a bunch of different lenders so that they can process your application and offer you a loan.

However, this process means that there are a bunch of lists of customer info floating around out there, lists that can be bought. Many times they’ll be bought by legit lenders, but sometimes they’ll be bought by scammers who want just enough info on a person to be able to trick them.

Once one of these scammers gets their hands on a list, they start hitting the phones. Using the information from your application, they will call your phone and tell you that such-and-such loan was never paid back. They’ll inform you that they work for a debt collector and that it’s time to pay up.

The funny thing about these scams is that many of the loans they are demanding payment for never even existed. (Okay, we lied. It’s not that funny.) All these scammers need is the information that you once applied for a loan in order to gin up a story where you are in deep, deep trouble—even though, in reality, you’re totally fine.

They will make big threats to scare people into paying.

There are two reasons that these con artists call people over the phone. The first is that they want to leverage the fear and awkwardness they can create by yelling at people. Scammers will make huge, scary-sounding threats. They’ll tell their mark that they could end up in jail or get sued and taken to court if they don’t settle the debt right now.

That first part is an outright lie. You can’t get sent to jail for failing to pay a debt collector. And using threats in order to extract payment is illegal. Debt collectors cannot threaten you (especially with jail time), they can’t swear at you, and they cannot threaten to ruin your reputation. Of course, these debt collectors aren’t really debt collectors, so they will do all of these things.

The scammer will likely pose as an attorney. They threaten to take you to court and have your wages garnished if you don’t pay them now.  And while a creditor or debt collector can take you to court and get a court order to garnish your wages, they cannot threaten garnishment without the said court order, and they can’t threaten legal action if they don’t intend to follow through.

But again, these scammers are not going to follow the rules set down for legitimate debt collectors. Identifying these illegal behaviors is a great way to nail them for what they are: criminals.

The second reason that scammers like to call people over the phone is that it’s much harder to leave a paper trail. Letters or emails will contain information that can be easily traced back to them or help their mark verify that they’re a fake. As we’ll lay out in the following section, getting info on your scammer is the best way to take them down.

3 ways to sniff out a fake debt collector.

Aside from taking note of their abusive and illegal behavior, here are three ways you can identify whether or not the debt collector on the other end of the phone is really who they say they are. These suggestions come courtesy of the Consumer Financial Protection Bureau (CFPB):

  1. Ask them to verify the debt in writing. You have a legal right to something called a “validation notice.” This is a written form that specifies the amount of the debt, the name of the creditor, and certain rights you hold under the Fair Debt Collection Practices Act. Tell the debt collector you refuse to speak with them until you receive such a notice in writing. Legit companies will send you one immediately. Scammers won’t
  2. Ask them for their company’s info. A real debt collector will have no trouble providing this info, while a scammer will do everything they can to avoid it. Ask them for their name, their boss’s name, the name of their company, and their business address. Also, ask them for their phone number and their business license. If they give you this information, check them out! You can also call your state Attorney General’s office to see if any complaints have been filed against them.
  3. Call your original creditor. If this company is a debt collector, then that means that they bought your debt from someone else. If you can’t get them to tell you what lender sold them the debt, then call that original lender to verify that this debt collector is real. And if you can’t get the debt collector to tell you any of this info, just hang up. They’re trying to scam you.

Do not give them any of your personal info over the phone.

This is the most important thing you can do when dealing with any debt collector, but especially with one you’re not sure is legitimate. Keep your wits about you and your sensitive info like your bank account, Social Security number, and credit cards away from them.

Scammers want to put the screws to you so that you’ll cough up this information to make them go away. But giving them sensitive personal and financial info doesn’t just mean you’re paying them for a debt you never owed. It means giving them the tools they need to steal your identity, something that could plague your finances for years to come.

In the end, keeping yourself safe from these fake debt collections scams is actually pretty easy. Just follow the advice laid out in this post and you’ll be fine. Or, if you want to go on the offensive, you can follow the example set by this guy, who got a call from a shady debt collector and proceeded to, well, just read the story and find out for yourself. It’s a trip.

Don’t let a scammer decimate your savings and leave you relying on no credit check loans, title loans, and cash advances just to get by. Even a safe, affordable bad credit loan pales in comparison to … not needing any loans at all. To learn more about how you can keep your finances safe from scammers, check out these related posts and articles from OppLoans:

Have you ever been contacted by a fake debt collector? We want to hear from you! You can find us on Facebook and Twitter.

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