Debt Collection Fraud

How It Works

Debt collection fraud involves scammers impersonating legitimate debt collectors or creating fake debts to scare victims into paying money they don’t owe. These fraudsters often use threats of legal action or arrest to force payments.

Common Methods of Debt Collection Fraud

• Debt settlement scams: Fraudsters provide false promises to settle debts in exchange for upfront fees.
• Fake lawsuits or arrest claims: Fraudsters threaten consumers with lawsuits or arrest for unpaid debts to force payment.
• Phony debt collectors: Scammers demand immediate payment for fake or non-existent debts.

Warning Signs

• Receiving calls or letters from debt collectors for debts you don’t recognize or owe.
• Threats of arrest, legal action, or wage garnishment if payment isn’t made immediately.
• Refusal by the caller to provide written verification of the debt.
• Demands for payment via wire transfers, prepaid cards, or gift cards.

Ways to Avoid It

• Request written verification: Always ask for written proof of the debt from the lender or servicer before making any payments.
• Know your rights: Under the Fair Debt Collection Practices Act (FDCPA), you are entitled to dispute a debt and request verification.
• Do not share personal information: Never provide sensitive information, like your Social Security number or bank details, to unsolicited callers.

Ways to Report It

Scammers pretend to be legitimate debt collectors, often attempting to collect on non-existent or fake debts using threats or intimidation so it is important to take action to mitigate any potential damage and ensure that the fraudsters are reported to the proper authorities.

• Report to the Internet Crime Complaint Center (IC3)
  • Online: Submit a complaint to the IC3, a division of the FBI.
  • This is especially useful for internet-related crimes.
• Report the fraud to the Federal Trade Commission (FTC)
  • Online: Visit ReportFraud.ftc.gov to report the fraud. Provide as many details as possible about the interaction.
  • Phone: Call the FTC at 1-877-FTC-HELP (1-877-382-4357) if you prefer to file your complaint over the phone.
• Report to the Consumer Financial Protection Bureau (CFPB) or your state attorney general’s office
  • Report suspicious debt collectors: If you suspect a scam, report it to the CFPB or your state attorney general’s office.
  • Online: Submit a complaint through the CFPB’s complaint portal.
  • Phone: Call 1-855-411-CFPB (1-855-411-2372).
• Report to local law enforcement
  • If you believe you are dealing with a scammer or are being threatened, contact your local law enforcement agency to file a report.
• Place a fraud alert on your credit report
  • Contact credit reporting agencies: Place a fraud alert or credit freeze on your credit reports by contacting one of the three major credit bureaus. The bureau you contact will inform the other two.
    • Equifax: 1-800-525-6285
    • Experian: 1-888-397-3742
    • TransUnion: 1-800-680-7289
  • A fraud alert makes it harder for identity thieves to open accounts in your name.
  • Duration: A fraud alert lasts for one year, but you can extend it.

Remember: Being proactive and informed is crucial when dealing with debt collection fraud.