Between mortgages, car loans, credit cards, personal loans, and other payment plans for a variety of purchases, there are many ways you can incur debt. Sometimes, one or more of these debts may be unpaid and the creditor (the company to whom the money is owed) may send the debt to collections. When this happens, you still owe the debt but must now pay it to the collection agency instead of the original creditor. While this seems to be a straightforward system, it does have a significant flaw: debt collection scams. From criminals pretending to be a debt collector to legitimate debt collectors using unethical and fraudulent tactics to collect, being able to recognize them is imperative to avoiding having your money or identity stolen. If you have been the victim of one of these scams, or believe someone is trying to scam you, call King Law Offices at (888) 748-KING and speak with one of our experienced Tennessee consumer protection attorneys to learn more about how to protect yourself and how to recover if you have already been a victim. We may also be able to assist residents of North Carolina and South Carolina.
Know Your Debts
The easiest and safest way an individual can protect themselves against debt collection scams is to be aware of and know their debts. Individuals should keep track of what debts they owe, including to whom the debt is owed, how much the debt is, and a rough idea of what the debt is for. While this may not deter scammers, it will allow the individual to confirm whether the alleged debt is one that they know they owe. This can be particularly important during separations and divorces, when the spouses’ marital debt is divided between them and one spouse may not pay their share.
When an individual knows that their debt has been sent to collections, they should find out who the collection agency is and note the agency’s name and contact information. This will allow them to check that information against what the individual contacting them provides. If the information does not match, this should be a red flag that this is likely a scam. However, even if the information does match, individuals should be cautious and ensure that they are speaking with someone who currently works for the collection agency and not lying about who they are.
Red Flags of Debt Collection Scams
Legitimate debt collectors often get a bad reputation but they are restricted by law in what they can and cannot do. On the other hand, debt collection scams have no restrictions, which can make it extremely easy to identify them in some cases. In some instances, an otherwise legitimate but unethical debt collector may use the same tactics as a scammer, but due to the laws indicating what they are allowed to do, consumers have recourse against those individuals or agencies. Scammers can be convincing, work outside the law, and disappear once they have been successful.
Some red flags to look for in determining whether it is a debt collection scam include:
- Unexpected Contact or Debt: People are usually aware when they have not paid a debt, and it has been sent to collections. If the call is unexpected because the individual believes the debt is not in collections, or the debt is unfamiliar or one they believe has been paid, this may indicate it is a scam.
- Demands for Immediate Payment: Under the law, collection agencies must allow the debtor time to pay. While they can request immediate payment, they cannot force the individual to pay, and most offer payment plans. If the debt collector demands immediate payment and refuses to make reasonable arrangements, it is likely a scam.
- Threats and Intimidation: If they try to intimidate the person into paying or use threats such as being arrested, taking legal action, or garnishing wages, it is likely a scam. However, legitimate collection agencies can inform individuals that they will take legal action if they can and intend to do so.
- Refusal to Provide Written Validation: Legitimate debt collectors will send a written validation notice that explains the individual’s rights and details about the debt. Debt collection scams will not provide this written validation and may even go as far as to say they do not have to. However, the Federal Trade Commission’s (FTC) Fair Debt Collection Practices Act (FDCPA) provides that they must send this in the initial communication or within five days after the initial communication with the consumer regarding the debt.
- Insistence on Unusual Payment Methods: A legitimate collection agency typically offers several payment options, from using a credit or debit card to automatic bank withdrawals or writing a check. Scammers insist on unusual payment methods like wire transfers, prepaid cards, or gift cards. These methods are often untraceable and offer no recourse when the victim realizes they have been scammed.
- Lack of Information: A legitimate debt collector with a valid debt will have all of the information needed to explain and collect the debt. They should also be able to provide proof of the original debt, such as an original bill or a signature on a contract. If the person trying to collect a debt lacks information, especially if the only information they can provide is the debtor’s name and the amount owed, it is probably a debt collection scam.
- Aggressive or Vague Responses: If the debt collector offers responses that are aggressive, such as threatening the debtor with jail or other legal action or saying insulting or cruel things, or if they only offer vague responses to questions or statements that should have specific responses, they may be engaging in one of the many debt collection scams that exist.
- Contact at Odd Hours: The FDCPA provides that the generally acceptable hours for debt collection communication are after 8 a.m. and before 9 p.m. at the consumer’s location. Contacting a consumer outside of those hours means it is likely a scam.
- Claims of Government Programs or Debt Elimination Guarantees: Some debt collection scams include promises that the debtor can be enrolled in a government program to help them pay off this and other debts, or they may make guarantees that they can help the debtor eliminate all of their debt. Signs that this is a scam include asking for upfront payments, pressure to enroll quickly, demanding immediate payment using unusual payment methods, and unsolicited calls. Legitimate debt relief services do not contact consumers until or unless the consumer has contacted them first.
What Legitimate Debt Collectors Cannot Do
The rules of law do not bind debt collection scams, and scammers will engage in a variety of unethical, illegal, abusive, or harassing behaviors to try to get money from their victims. Legitimate debt collectors are bound by the law and must avoid certain behaviors to avoid potential consumer lawsuits, investigations by the FTC or local law enforcement, or other actions.
Specific things that legitimate debt collectors cannot do include:
- Contact the consumer at unreasonable hours
- Call the consumer’s workplace if the consumer tells them they cannot get calls at work
- Harass the consumer about the debt
- Engage in collection practices that are unfair, such as taking a post-dated check and depositing it early, trying to collect more than the consumer owes, or illegally seizing property
- Lie about the money owed
- Threaten with jail time or unwarranted legal action
- Falsify the name of who they represent
These actions can indicate debt collection scams, but they can also be done by legitimate debt collectors violating the law. When done by a legitimate debt collector, it may be a scam (if the consumer does not owe the debt) or unethical and illegal behavior (if the consumer does owe the debt). Regardless of the circumstances, the consumer can report what happened. If a debt collector has engaged in any of these behaviors while collecting a debt from you, an experienced consumer protection attorney at King Law Offices may be able to assist you in taking appropriate legal action.
How to Protect Yourself Against Debt Collection Scams
Debt collection scams have become extremely common, but consumers are not defenseless against them. There are several things consumers can do to protect themselves against these scams.
Ask For Contact Information
One of the first things to do is ask the debt collector for their contact information. Legitimate debt collectors will tell you their name, the name of the company they work for, the street address of the company, and a callback number. Debt collection scams often cannot provide this information. If they give the information, the consumer should confirm its accuracy. The consumer should call the callback number to confirm it is a functioning number and that it reflects the company name they were given. If the number is not working or does not confirm the company name, this is a red flag for a scam.
Ask to Confirm Basic Debt Information
The consumer should also ask the debt collector to confirm basic information about the debt. While debt collectors will not confirm private information about the consumer, such as account numbers or the consumer’s Social Security number, without verifying the consumer’s identity, they can share information such as the original creditor’s name and the amount owed on the debt. If they do not, this may indicate that this is a scam.
Contact the Original Creditor Directly
Consumers can also contact the original creditor directly to confirm whether their account is in collections and, if it is, with whom. The original creditor will also be able to provide contact information for the debt collector, allowing the consumer to confirm the information they were given or to contact the debt collector directly. Additionally, consumers can also check their credit report to see if an account has been sent to collections. Contacting the original creditor and checking credit reports can also be beneficial for confirming whether an unfamiliar debt is legitimate.
Ask for Written Verification of the Debt
Consumers should ask for written verification of the debt. Specifically, they should ask for the original creditor’s information and the amount of the debt. If the consumer disputes the debt, legitimate debt collectors must then provide verification of the debt, such as a court judgment against the consumer, an original bill from the creditor, or a contract signed by the consumer. A refusal or inability to provide such verification often indicates debt collection scams.
Dispute Unrecognized Debts
If the consumer does not recognize the debt, they should dispute it. Upon disputing the debt, legitimate debt collectors must provide verification of the debt. People or companies running debt collection scams are unable to provide this verification. If the consumer does receive verification, they should contact the original creditor to confirm the details and that it is a legitimate debt, as some debt collection scams may also include seemingly valid documentation.
Do Not Provide Personal Information
Most legitimate debt collectors will ask the consumer to confirm personal information, including their name, address, date of birth, and Social Security number, to ensure they have the correct individual who owes the debt. While this is common practice, consumers should be cautious and not provide these details unless they are certain the person they speak with is a legitimate debt collector. One way to ensure they are speaking with a legitimate debt collector who is collecting a valid debt is to ask for written validation and then use the phone number or website provided in that documentation to contact the collector. Another option is to get the debt collector’s contact information from the original creditor. If the consumer receives an unsolicited call from a debt collector, they should not provide this personal information until they have confirmation that it is a legitimate debt collector.
Know Your Rights Under the FDCPA
The FDCPA gives consumers many rights regarding debt collection. Familiarity with these rights and the things that the FDCPA prohibits debt collectors from doing can help consumers recognize debt collection scams before they fall victim to them.
What to Do If You Think You Have Been Targeted By a Debt Collection Scam
Sometimes, debt collection scams and the people who perpetrate them are very sophisticated, and consumers can fall victim to them. When a consumer has become a victim of one of these scams, or if they realize it is a scam and avoid becoming a victim, there are actions the consumer can take to protect themselves and others.
Protect Your Sensitive Information and Credit
If consumers give personal information to someone in a debt collection scam, they should take action to protect their information and credit as soon as they realize they have done so. This includes putting a fraud alert or credit freeze on their credit report with the three credit bureaus. Depending on the circumstances, they may also file a police report for identity theft with their local police or sheriff’s department.
Document Everything
Consumers should document everything they can about what happened, even if they did not provide personal information. They should write down any names they were given, including the name of the individual they spoke to, the name of the collection agency, and the name of the original creditor. Consumers should also document the dates and times of all calls, with detailed notes about what was said, and keep any written materials they were provided by email or mail.
Report the Scam to the Authorities
Reporting debt collection scams to the proper authorities allows them to track these scams and try to end them. Consumers can report these scams to the Federal Trade Commission. Additionally, they can report scams to the Tennessee Attorney General, South Carolina Labor Licensing Regulation, or North Carolina Attorney General, depending on which state the consumer lives in. The Consumer Financial Protection Bureau also accepts complaints about these scams.
Consider Taking Legal Action
Some debt collection scams are not scams by criminals seeking to steal information, but are legitimate debt collectors who violate the FDCPA or other laws in their attempts to collect the debt. While legal action against a criminal running a scam can be difficult because the consumer may not have any valid information about the scammer, legal action against a debt collector who has violated the law is possible. After reporting the behavior to the FTC or the state attorney general, the consumer should consult with an attorney to discuss their options for a lawsuit.
Does Tennessee’s New Information Protection Act Impact Debt Collection or Debt Collection Scams?
In 2023, Tennessee passed the data protection and privacy law called the Tennessee Information Protection Act (TIPA). The law takes effect July 1, 2025. This law primarily impacts businesses that handle the personal data of Tennessee consumers, such as debt collectors. However, they must exceed certain income and data processing thresholds for TIPA to apply.
While the FDCPA focuses on eliminating deceptive, abusive, or unfair debt collection practices, TIPA protects Tennessee residents’ personal information rights. Therefore, debt collectors subject to TIPA will be required to protect consumer information and be transparent about their data collection and usage practices. However, TIPA does not address debt collection the way the FDCPA does. This means that Tennessee residents may notice some minor changes in privacy notices, and being able to opt out of targeted advertising or data sales by debt collectors, TIPA will generally not affect the methods that debt collectors use to collect debts. There are penalties for violations of TIPA, so if a consumer believes that a debt collection agency may have violated TIPA after July 1, 2025, they may want to consult with an attorney to learn more about filing a complaint and holding the debt collector responsible for the violation.
How an Attorney May Be Able to Assist You
Although debt collection may never be a pleasant experience, it should not be one that violates your privacy or other rights. From scams to collect money that you do not owe to legitimate debt collectors who use unethical or fraudulent tactics, debt collection scams can cause anxiety and panic, putting your money and identity at risk. A consumer protection attorney may be able to assist you by helping you handle the debt with the original creditor before it goes to collections, communicating with the debt collection agency on your behalf when it has gone to collections, or assisting with taking legal action if a scam has targeted you. Call King Law Offices at (888) 748-KING to schedule a consultation in our Johnson City, Tennessee office or one of our North Carolina or South Carolina offices.