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Fraudsters are now Using Scare Tactics to Siphon off Money as Part of Debt Collection Scams

The Fair Debt Collection Practices Act explicitly prohibits debt collectors from engaging in conduct that is meant to harass, oppress, or abuse consumers.
Cover Image Source: Debt Collection Scams | Pexels | By Karolina Grabowska
Cover Image Source: Debt Collection Scams | Pexels | By Karolina Grabowska

As more people are constantly looking for ways to cut down their debt through swift repayments amidst a cost of living crisis, scammers are lurking around to take advantage by posing as collection agents. According to the Federal Trade Commission (FTC), over 116,450 debt collection reports were received in 2022, with a significant portion related to abusive debt collection activities or false claims.

Financial transactions Pexels | By Kuncheek
Image Source: Pexels | By Kuncheek

One of the primary signs of a debt collection scam is the use of pressure tactics and intimidation. Scammers often employ scare tactics, threats, and emotionally charged language to create a sense of urgency, hoping that individuals will act hastily without asking questions. 

The Fair Debt Collection Practices Act explicitly prohibits debt collectors from engaging in conduct that is meant to harass, oppress, or abuse consumers. This includes threats of jail time, bodily harm, or the use of profanity. Moreover, legitimate debt collectors may also be persistent, but if you experience threats that go beyond the legal boundaries, it's a major red flag indicating a potential scam.


A genuine debt collector is transparent about their identity and will provide you with their company's contact information. If you receive a call, email, or letter from a supposed debt collector, ask for their company name, address, and phone number.

Scammers, however, often try to avoid these questions and insist on immediate resolution of the debt. Refusal to disclose their identity and contact information is a clear indicator that the entity may not be a legitimate collection agency.

Debt collector's false claim | By Lukas
Image Source: Pexels | By Lukas

According to the law, debt collectors must provide specific information upon request, including the creditor's name and the amount owed. Request these details and cross-reference them with your credit report to validate the legitimacy of the debt.

It is important to check your credit report for accounts in your name and investigate if any defaulted accounts have been sent to collection agencies. Additionally, reach out to the original lender or creditor to confirm the status of your debt. If the supposed debt collector cannot provide accurate information, it's likely a scam.

Moreover, legitimate debt collectors are required to send formal, written notifications via mail within five days of initial contact. These letters should include important information such as the debt amount, the creditor's name, and a disclosure statement giving you 30 days to dispute the debt. If you receive a call without prior written notification, you need to be cautious.

A shopper pays cash for sales merchandise | Getty Images | Photo by Joe Raedle
Image Source: Getty Images | Photo by Joe Raedle

Scammers often prefer non-reversible payment methods, such as prepaid cards, money orders, or money transfers. These methods allow them to escape with your money without leaving a trace. Be cautious if a supposed debt collector insists on payment through unconventional methods and avoid transactions that cannot be easily verified.

When dealing with a debt collector, opt for payment methods that offer a paper trail and verification, such as credit cards or checks. This way, you can confirm the payment and the amount paid, protecting yourself from potential scams.

Reporting fake debt collectors Pexels | By MART PRODUCTION
Image Source: Pexels | By MART PRODUCTION

If you suspect that you have encountered a debt collection scam, taking prompt action is essential to protect yourself and others. There are few steps you can take to report fake debt collectors.

Keep detailed records of all communication with the supposed debt collector. Note the date and time of each phone call, save emails and texts, and gather any written correspondence. If legal in your state, consider recording phone calls. The more information you have, the stronger your complaint will be.

Contact your state's attorney general to report the scam. Most attorney general offices have toll-free numbers or online platforms where you can submit complaints related to debt collection scams.

Report the fake debt collection agency to both the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB). Both agencies accept online reports and have chat features to assist you in the process.