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Recognizing Scam Collection Calls for Phantom Debt

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Altogether, the FTC heard 53,004 complaints in 2020 — an average of 145 complaints a day — about debts that people did not owe and about abusive or threatening debt-collection practices, an 8 percent rise in complaints from 2019.

Likewise, AARP’s toll-free Fraud Watch Network Helpline, 877-908-3360, regularly hears from people besieged by debt collectors for obligations that were never theirs. Some callers were accused of owing $1,000 or more for magazine subscriptions they never purchased.

Aggressive and relentless

Talking about the bad actors, AARP’s Amy Nofziger, who oversees the helpline, says: “They are relentless. They will call you morning, noon and night and oftentimes even try to call your family. Many people are worried that their identities were perhaps stolen, but usually it’s just aggressive debt collectors trying to collect money whether or not it is actually owed. And they don’t care who pays.”

Under the law, collectors generally are forbidden from contacting debtors before 8 a.m. or after 9 p.m.

The FTC and Consumer Financial Protection Bureau (CFPB) both enforce federal laws governing debt collectors. For consumers, a starting point is knowing that the term “debt collector” can refer to the original creditor; an entity trying to collect a debt on behalf of a creditor; an entity trying to collect on behalf of a third party that has purchased the debt from a creditor; or a third party that purchased the debt obligation.

If you are contacted about a debt you don’t recognize, here’s what the FTC and CFPB advise:

1. Find out who is calling. Get their name and the name of the collection company and its address and phone number. Ask for a license number, too, as some states license debt collectors. If you’re denied such information, that’s a red flag.

2. Get what’s called “validation” about the debt. Within five days of contacting you, a debt collector must tell you the amount of the debt and the name of the current creditor. It’s a red flag if that information isn’t given. If a debt is legit but you think the collector may not be, contact your creditor.

3. Don’t respond to threats. If someone says he or she will have you arrested if you don’t pay immediately, hang up and report the collector to the FTC online at ReportFraud@ftc.gov. Likewise, creditors may not call your employer about a debt; such outreach generally must be limited to finding out where you work and live and your phone number.

4. Dispute the debt. If you think you don’t owe some — or all — of the debt, dispute it with the collector by mail or online.

5. If you believe the calls are fraudulent, send a letter demanding the caller stop phoning you and keep a copy for your files. Here are sample letters. Note: Sending a letter like this does not make the debt disappear and does not prevent a debt collector from suing you or reporting the debt to a credit bureau.

6. You may be able to renegotiate a debt by seeking a reduction in late fees and interest or working out a payment plan.

7. If you are still having trouble, seek help from a nonprofit credit counseling organization.

8. Be wary of debt settlement companies that require payment of an upfront fee to renegotiate your debt or work out a payment plan with creditors. There is no guarantee of success, and even worse, you could fall deeper into debt than when you began.


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