Debt Collection Harassment

En español  |  As old-fashioned telephone harassment continues, some debt collectors are branching out with controversial new tactics. Here are four to watch out for:

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1. The hospital hustle. When you go to the hospital, the person who collects your admitting information or visits your room post-surgery may not be a hospital staffer, but a debt collector seeking your money.

To better recoup unpaid hospital bills (nearly $40 billion in 2010), some hospitals are using debt collectors who pose as employees — or at least don't properly disclose that they're collectors. The goal is to make you pay upfront, settle old bills or go elsewhere for emergency care.

One collection agency specializing in hospital debt, Accretive Health, was recently sued by Minnesota Attorney General Lori Swanson for allegedly violating federal privacy laws through this practice. The suit was filed after officials learned that an Accretive employee had a laptop containing the records and personal information of some 23,500 patients at two state hospitals.

This information was used to create "stop lists" to help stall certain patients from receiving emergency care, says Swanson. Accretive employees allegedly would sometimes run through prepared scripts to make patients believe they would not receive treatment until payment was made.

In a statement, Accretive cites "inaccuracies, innuendo and unfounded speculation" in Swanson's lawsuit. In late April, the company filed a motion to dismiss it.

A week later, Health and Human Services Secretary Kathleen Sebelius said her department would look into the practice of having "aggressive contractors" confront hospital patients while "not making it clear that they were actually bill collectors and not part of the hospital system."

• Your defense: Know that federal law requires hospitals to provide emergency care to anyone regardless of citizenship, legal status or ability to pay. Don't assume a hospital "employee" soliciting your information is legit; ask to see facility-issued credentials and verify the person's position with personnel you know to be genuine.

2. The credit card capture. If you've got a debt that's passed its statute of limitations — usually three to 10 years, depending on your state — you're home free, right?

Not if you fall for a legal but sneaky maneuver.

Here's how it works. A collector who's after that expired debt forms a partnership with a bank, which then offers you a credit card. Because of your debt history, you may not qualify for traditional plastic.

The fine print of the agreement explains that payments will be applied, in part, to the previous debt. So if you make one payment on the new card, you become legally obligated to pay at least some portion of the old debt. This restarts the clock on the statute of limitations.

• Your defense: If you're contacted about a past debt, always check your state's laws about statute of limitations. But if you've owed in the past and are offered a new credit card, be on guard for fine-print gotchas that might revive an old debt. Some people, it should be noted, knowingly take these cards because otherwise they'd have no plastic at all.

3. False Facebook friends. It's no surprise that more debt collectors are using social media to collect information about debtors.

Typically, they use Facebook and other websites to locate debtors or get information about the person's assets. Sometimes, collectors set up fake profiles to befriend their targets, impersonate real "friends," or engage in harassment, such as posting messages advertising that the person owes a debt. Such harrassment violates the Fair Debt Collection Practices Act (PDF).

• Your defense: Whether or not you owe a debt, set your Facebook privacy settings so your profile is visible only to known and vetted friends. Accept Friend requests only from people you know and trust. Above all, realize there are no secrets in cyberspace, and scammers also troll social media. So keep your personal info truly "personal."

4. High-mileage hoaxes. In one classic debt collection scam, local crooks pose as police or government agents and telephone debtors — or even people who owe nothing — to threaten immediate arrest unless a supposed debt is paid. Now some of these impostors are calling from far-away places, like India.

Such was the case of a scam ring recently busted by the Federal Trade Commission. Over the course of two years, fraudsters claiming to be "Officer Mike Johnson" or reps of fake government agencies (including the "Federal Crime Unit of the Department of Justice") made more than 2.7 million calls to at least 600,000 numbers nationwide. All told, they bilked victims of more than $5.2 million.

The callers claimed to be watching their targets or standing by just blocks away from their homes or workplaces for an imminent arrest, but in fact were thousands of miles away in India (although the alleged ringleader was based in California).

• Your defense: Even if a caller has your personal information such as an address or Social Security number, be aware that those details could have been purchased for use in extorting money from you. Insist on getting written proof of any claimed debt, and then carefully check the claims and company before paying anything. And use common sense: Since when do police give advance warning that they're going to make an arrest?

Go to this Federal Trade Commission Web page for information on how to deal with debt collectors. Visit this one for tips on how to distinguish who's real and who's fake.

Sid Kirchheimer is the author of Scam-Proof Your Life, published by AARP Books/Sterling.

Also of interest: The savings vs. debt payoff dilemma.